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AML penalties skyrocket during 2019, doubling 2018 figures

AML penalties skyrocket during 2019, doubling 2018 figures

A record number of AML-related fines were issued globally in 2019, totalling £6.2 billion in financial penalties at an average of $145.33 million per fine.

Know Your Customer solutions firm Encompass Corporation, found that of the 58 AML-related breaches handed down globally throughout the year, the US accounted for 25 fines totalling $2.29 billion and the UK with 12 penalties totalling $388.4 million.

UK and US financial regulators were the largest issuers of anti-money laundering penalties from 1 January and 31 December 2019 across the globe with under half being issued to banks - a reduction from 2018.

Fines were delivered across several jurisdictions including Belgium, Latvia, Norway, France, Germany, Hong Kong, Lithuania, Bermuda, Tanzania, Ireland, The Netherlands, the US and UK.

Wayne Johnson, co-founder and CEO of Encompass Corporation comments: “Since 2015, annual AML penalty figures have been steadily rising each year. Multi-million dollar fines have been commonplace for a while, but we are now seeing more penalties of one billion dollars or over, with two in 2019 alone.”

Historically it has been banks which have seen the majority of AML-related fines, however a drop in the proportion of banks seeing these fines shows that money laundering should now be recognised as a business issue that is not necessarily exclusive to financial services.

Johnson elaborates: “Regulators in the gambling/gaming sector were particularly active in 2019, handing out five fines, all of which were well over $1 million and the highest being $7.2 million. Interestingly, four of these were in the UK, demonstrating a crackdown here.”

It isn’t entirely surprising that the US and UK lead the way in terms of AML-related penalties, says Johnson. “Given that these two countries have transparent regulatory cultures and active regulatory bodies, we expect we shall continue to see the largest number of fines originate from here, but we are seeing activity from increasing numbers of jurisdictions as time goes on."

The EU's fifth and sixth money-laundering directives will potentially spur an increase of penalties handed down in the region during 2020 and beyond. "We are not expecting the spotlight on money laundering to dim. The continued and increased focus on this area highlights the severity with which it is viewed at a global level, which is not surprising given the negative economic and societal repercussions it can have. As we head into 2020, we shall continue to monitor and analyse AML penalty data with interest to see how it evolves.”

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