Exclusive: penalties for global financial institutions halve in 2021
The value of penalties issued to global financial institutions fell by 49 per cent in 2021, as pandemic restrictions thwarted investigations.
Global financial institutions were hit with enforcement actions totalling $5.4bn over money laundering and data privacy breaches in 2021, down from $10.6bn in 2020 according to analysis by compliance firm Fenergo. The total number of fines issued dropped from approximately 760 to 176 with researchers at Fenergo attributing the decline in regulatory activity to disruption caused by the Covid-19 pandemic and a lack of adequate technology to stop criminal activity.
“The pandemic impacted regulatory investigations,” said Rachel Woolley, the global director of financial crime at Fenergo. “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.”
“With criminals using more sophisticated methods for hiding illicit gains such as crypto currencies and other virtual assets, the clock is ticking for financial institutions to adopt technology that provides a holistic view of customers and the risk they potentially present, as well as identifying activity and behaviours that could indicate criminal activity,” she added.
Despite the overall drop in the value of fines issued worldwide, bumper payouts were still demanded from a handful of banks. Swiss bank UBS was slapped with a $2bn fine by a Paris court, the largest of the year, for helping wealthy French clients to avoid paying taxes.
In the UK, regulators bucked the macro trend with a near threefold increase in the amount of fines issued in 2021 compared to the previous year.
The UK issued enforcement actions valued at $688m in 2021, up from $231 in 2020. Over half the total was raised by a $350m fine issued to Natwest in December by the FCA which issued a $85m fine to HSBC weeks later.
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