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AML fines drop as regulators clamp down on crypto

According to Kroll’s annual Global Enforcement Review, enforcement activity of anti-money laundering (AML) is slowing. Now, regulators are beginning to shift their attention away from banks and have  started to focus on cryptocurrency firms and exchanges. 

June 10, 2022
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According to Kroll’s annual Global Enforcement Review, enforcement activity of anti-money laundering (AML) is slowing. Now, regulators are beginning to shift their attention away from banks and have  started to focus on cryptocurrency firms and exchanges. 

The latest review found that the value of fines issued to financial services firms for AML failings globally fell from $2.2 billion in 2020 to a new low of $1.6 billion in 2021. For context, $3.3 billion worth of fines were issued in 2018.

Meanwhile, last year, US regulators issued more AML-related fines to cryptocurrency businesses, including one crypto exchange that was fined $100m.

Attention turns to other areas of financial services

Speaking about the Global Enforcement Review, Kroll’s managing director, financial services compliance and regulation, Malin Nilsson said: “In the Western world, it is almost impossible to find a major, global bank that has not been sanctioned for AML or other financial crime failings in recent years.”

“This is reflective of the predominant focus global regulators have placed on ensuring AML measures are functioning robustly at the world’s major financial services institutions.”

“Now that AML-related concerns and failings have resulted in many large banks being sanctioned, regulators are beginning to pay increased attention to other areas of financial services.”

Influence of the UK’s FCA begins to wane

In the UK, the Financial Conduct Authority (FCA) issued four AML fines totaling $441m last year. However, research from Kroll has discovered that AML investigations by the FCA have been slow. Added to this, it’s also believed that the FCA’s enforcement action may be declining.

As of March 31, 2021, the FCA had 54 open active financial crime investigations. However, eight of these investigations were originally opened in 2016 and 14 were opened in 2017. By the close of March, the FCA had only opened three AML enforcement investigations in 2022.

“Having opened 13 AML cases in 2016 and 24 cases in 2017, the number of new AML investigations slowed considerably in recent years, with only three cases opened in 2021,” said Nilsson.

“The FCA will be looking either to achieve a public outcome from its existing cases or to close them in order to be able to deploy resources on new investigations, potentially in sectors other than banking.”

“Given the huge growth of lightly-regulated cryptocurrency businesses in recent years, the increased level of scrutiny being given to these institutions is one trend we can safely predict will continue to gain momentum.”

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