Studies have shown that fines for AML failings by regulated institutions were five times higher in 2020 than they were in 2019. In total, AML penalties for 2020 reached $2.2 billion.
The findings were uncovered in Kroll’s annual Global Enforcement Review (2021). The study found that, globally, 45 fines for AML failures were issued in 2020. This matched the number of fines issued in 2019.
In addition to this, the pattern of the fines issued in the first half of 2021 seems to be following the trend set in 2019 and 2020. The latest data shows that 17 fines were issued between January and July 2021, which was just under half of 2020’s year-end total.
However, despite consistency in the volume of fines issued, the total value of AML fines has skyrocketed to $2.2 billion. This was five times the amount issued in 2019.
Claire Simm, managing director, financial services compliance and regulation at Kroll, commented: “The figures show that investigations were not paused for Covid-19. While the number of fines remained constant, the value of fines surged as regulators imposed tougher penalties, continuing to send the message that despite any obstacles, enforcement remains a top priority for non-compliant behavior.
“These fines show that across the world, regulators continue to put high importance on financial crime enforcement. We can expect to see mega-fines and criminal enforcement continue through 2021 and beyond.”
The findings from the Kroll study came as the Financial Conduct Authority pursued criminal charges for money laundering failings against a regulated entity for the first time in the history of the regulatory body. Similarly, in America, the 2021 National Defense Authorization Act made comprehensive reforms to AML laws in the country.
The current pattern of AML fines and failures highlights the ongoing challenges that firms in every part of the world face when engaging money launderers. Now, enforcement activities and increased legislation in both the US and Europe demonstrate not only a shift in focus on regulation, but also that regulators are punishing AML failings more strictly than they ever have before. As a result, it’s vital that businesses take time to review their AML processes and ensure that they’re meeting the requirements of AML/CFT legislation.
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