Research suggests there is a direct correlation between the severity of violations and size of fines. While the number of fines has decreased, the penalty amount has continued to increase. In 2003 there were 153 fines with just $2.7 million worth of penalties; whilst in 2012 there were just 16 fines that totaled $1.1 billion in penalties.1

Henry Balani, Managing Director at BankersAccuity, comments: "2012 saw a tremendous increase in fines and penalties with several leading global banks hit with extremely large fines for AML and OFAC violations. The size of fines is typically based on several factors - level of egregiousness, willingness to self-report and ongoing remediation efforts. While the total number of fines has decreased, this trend is only temporary."

As demonstrated during the first half of 2013, the number of fines from January to May 2013 has almost doubled compared to the same period of the previous year.2

"Regulators have focused on high profile banks in recent years. The intent is to send a clear message to the market that violation of sanctions needs to be taken seriously by all banks and financial institutions. Now that the message has been sent, regulators in the upcoming years will again take a wider sweep and focus on institutions of all sizes," Balani continues.

In general, fines are levied for a range of reasons from internal 'payment stripping' to knowingly making payments to sanctioned countries. With high-profile enforcement of AML regulations globally, organizations are faced with increased risk and greater challenges to achieving and maintaining compliance. Key events and developing trends over the last decade offer insight and important lessons for firms seeking to avoid participation in illicit financial transactions.