Value of anti-money laundry fines have jumped to $706m since 2019

From: RegTech Analyst

The amount businesses are fined for failing to live up to their anti-money laundering commitments have skyrocketed in the last year, according to new research from Duff & Phelps. 

The provider of governance, risk and transparency solutions provider’s new report reveals that the value of AML fines around the world jump from the total $444m through 2019 to $706m in the first half of 2020 alone.

Although, it also found that global totals of AML fines in 2019 and the first half of 2020 are down compared to 2018 when fines issued totalled $3.29bn and in 2017 when that figure was at $2.13bn.

It was also below the yearly average of fine levels for the four-year period from 2015 to 2018: $1.87bn.

“Despite the uptick in AML fine amounts in 2020 we are still seeing fewer massive fines being imposed in the United States,” said Nick Bayley, managing director and head of UK regulatory consulting at Duff & Phelps. “This is very unlikely to reflect regulators attaching any less importance to AML compliance, it may simply be that the very largest financial institutions may be beginning to get their AML compliance in order, at last.

“Although we do see some big institutions repeatedly receiving major fines for their AML failings, the sheer size of the fines that have been imposed for these failings and the associated huge cost of remediation means many have seemingly now learned their lesson.”

The researchers also found that the US’ share of the fines has dropped from the 58% total globally in 2018 to only 12% this year, suggesting that other regions in the world are also issuing mega fines.

“For many years, US authorities have dominated the global AML landscape, through the imposition of numerous huge fines for AML failings,” said Bayley. “But that is beginning to change, with other jurisdictions, like Sweden, the UK and the Netherlands, recently imposing their own mega-fines.”

Of the fines found, customer due diligence was the most common one, with 115 significant cases recorded, followed by AML management with 109 cases and s         Suspicious activity monitoring with 82 cases. Compliance monitoring and oversight was the fourth most common category with 62 cases.

“Interestingly, looking at the key AML failings that are identified by regulators, we see the same areas being sanctioned again and again,” said Bayley. “This is consistent for regulators across the globe and also over the past five years.

“Firms should pay attention to the key AML failings that are consistently identified by regulators globally in their major enforcement actions. Despite the repeated messages in these enforcement cases it’s clear that market participants are continuing to struggle with their obligations in relation to client due diligence, transaction monitoring and AML management and oversight.”

“AML is probably the only compliance area that has consistently been the subject of major enforcement action by multiple regulators across the globe. This is something that we certainly don’t see changing in the years to come.”

Copyright © 2020 FinTech Analyst

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