The world's banks are continuing to struggle in their obligations to combat financial crime, with AML fine values in 2020 already surpassing 2019 as firms are repeatedly sanctioned for the same failings, according to a study by Duff & Phelps
The report found that the first half of 2020 has seen an uptick in AML fine values globally totaling $706 million compared to 2019’s full-year-total of $444 million.
However, the global totals of AML fines in 2019 and the first half of 2020 are down on the two previous years (2018: $3,297 million, 2017: $2,136 million) and still below the yearly average of fine levels for the four-year period from 2015 to 2018, $1,871 million.
Interestingly, the sharp drop in AML fine values between 2019 and 2018 came despite only a small drop in the number of cases — a decrease of just 14% in the number of significant cases.
Nick Bayley, managing director, head of UK regulatory consulting at Duff & Phelps, says the results reflect a drop in the value of fines imposed by US regulators:
"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," he surmises. “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.”
Duff & Phelps’ report highlights the four key AML failings from 2015-2020 that regulators across the world have consistently identified through the fines they imposed:
- Customer due diligence (115 significant cases)
- AML management (109 cases)
- Suspicious activity monitoring (82 cases)
- Compliance monitoring and oversight (62 cases)
Nick Bayley concludes: “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.”