AML, KYC and Sanctions Fines for Global Financial Institutions Reach USD $5.6 Billion Mid-Year

Fines issued by APAC regulators increased from USD $3.5 million to almost USD $4 billion

HONG KONG, Aug. 24, 2020 /PRNewswire/ -- Fenergo, the leading provider of digital transformation, customer journey and client lifecycle management (CLM) solutions, today released its mid-year findings on global financial institution fines which show that by the end of July 2020, penalties have totaled USD $5.6 billion for non-compliance with Anti-Money Laundering (AML), Know your Customer (KYC), and sanctions regulations.

Regulators in APAC, including China, Hong Kong SAR, Singapore, Malaysia, Taiwan, India and Pakistan, issued fines of almost USD $4 billion. Countries or regions where fines have increased include Pakistan (845% rise compared to 2019 mid-year), Hong Kong (+223%) and Taiwan (+116%) and are a result of increased enforcement actions in response to recent Financial Action Taskforce (FATF) criticisms and concerns highlighted in mutual evaluation reports. Pakistan is under increased scrutiny by FATF for having demonstrated strategic deficiencies in its AML/CTF regime.

Regulators in Malaysia issued the highest value enforcement actions in 2020 thus far. The regulator reached a settlement with a major US bank that included a USD $2.5 billion penalty and the guaranteed return of USD $1.4 billion in assets. The bank was fined for its role in the theft of billions of dollars from a Malaysian government fund, also known as the 1Malaysia Development Berhad (1MDB) scandal.

Rachel Woolley, Global Director of Financial Crime at Fenergo, said: "While we are seeing a 30% reduction in the value of fines issued to date compared to the same analysis period last year, it is likely that the total enforcement actions issued in 2020 will be on par with, if not surpass, the 2019 total of almost USD $8.4 billion. We can also expect to see additional penalties issued in response to the 1MDB scandal as the U.S. Department of Justice (DoJ) investigation remains open. Although regulatory and supervisory activity may have been impacted by COVID-19, global regulators have reinforced the importance of vigilance and reporting of suspicious activity to ensure the detection and prevention of financial crime throughout the pandemic. As banks continue to face challenges in the months ahead, they may struggle to stay on top of fraudulent activity brought on by COVID-related initiatives, which may result in fines later in 2020."

Three Swedish banks were fined USD $536 million for lacking sufficient AML governance and controls in the Baltic states. US authorities including the DoJ, the Federal Reserve and the New York State Department of Financial Services (NYDFS) levied fines of over USD $900 million against an Israeli bank for tax evasion and money laundering involving the Fédération Internationale de Football Association (FIFA). In addition, a fine of USD $150 million was issued by the NYDFS to a well-known German bank for its links to the late financier, Jeffrey Epstein.

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