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AML/KYC regulation

Compliance fines cratered in 2021, says regtech vendor



Rachel Woolley of Fenergo said financial regulators conducted fewer onsite inspections last year due to the covid pandemic. Image credit: Screengrab from a 2020 video posted on fenergo.com

Rachel Woolley of Fenergo said financial regulators conducted fewer onsite inspections last year due to the covid pandemic. Image credit: Screengrab from a 2020 video posted on fenergo.com

The value of penalties issued by financial regulators globally was down by half last year, compared to the previous year, according to an Irish regtech outfit.

Fines levied against financial institutions and employees for non-compliance with anti-money laundering and data privacy rules amounted to $5.4bn in 2021, a 49% drop from the $10.6bn recorded in 2020, Fenergo said on 6 January.

The penalties stemmed from 176 regulatory actions in 2021, a sharp decline from 760 in 2020.

The average AML compliance fine slapped on financial institutions was $34.4m in 2021. The largest was a French $2.03bn tax evasion penalty issued to UBS, which the Swiss bank is appealing.

A total of 16 individuals were collectively fined $16.5m for compliance failures.

Data privacy penalties totalled $17.4m worldwide, “the majority ($11.5 million) of which were for GDPR breaches in Europe,” Fenergo reported.

“The decrease in fines in 2021 is largely attributed to a reduction in the number of multi-billion-dollar fines compared to previous years,” Rachel Woolley, global director of financial crime at Fenergo, stated in a press release. The firm noted that several fines were issued in 2020 surrounding the multi-billion-dollar 1MDB scandal, possibly skewing that year’s figures.

The covid crisis played another factor in the reduction, Woolley reckoned: “regulators weren’t able to initiate as many on-premise investigations in the last two years which has likely had a knock-on effect on enforcement actions.”

On its website, Fenergo said that it provides digital compliance systems to financial institutions including ABN Amro, Bank of China, BNP Paribas, Credit Suisse, Danske Bank, Natixis, NatWest, Nomura, RBC and State Street, among others.