NEW YORK—Globally, financial institutions have tallied up $36 billion in fines since the financial crisis, a new report reveals, with one category seeing a 160% increase in just 15 months.
The findings were shared by software company Fenergo and its December 2019 report on financial institutions.
Marc Murphy, CEO of Fenergo, highlighted that the rise in financial crime and increasing regulation is creating a “tough battleground” for financial institutions trying to stay on top of a multitude of regulatory rules across different jurisdictions, reported Asset Servicing Times.
“We are still seeing the ramifications from the financial crisis,” Murphy said, “In today’s climate there is no other option but to leverage next generation technology to achieve a more effective and streamlined approach to regulation that allows financial institutions to approach regulatory compliance in a ‘business as usual’ manner.”
160% Increase
The report noted that the fines relating to Know Your Customer (KYC), anti-money laundering (AML) and sanction violations have all increased by 160% in the 15 months since the last report in 2018.
In total, 2019 brings an additional $10 billion in fines for non-compliance with AML, KYC and sanctions regulations, noted Asset Servicing Times in its analysis.
Financial institutions last year were fined $82.7 million for data privacy and the second Markets in Financial Instruments Directive (MiFID II) violations.
Additionally, amid global trade tensions, sanctions violations made up almost 40% of 2019 fines.
According to Fenergo, 12 of the world’s top 50 banks were fined for non-compliance with AML, KYC and sanctions violations in 2019.
Neutral, But…
By country, Switzerland was the biggest offender after a tier-one Swiss bank received the biggest single fine at $5.1 billion for AML breaches by the French Criminal Court, which exceeded the bank’s 2018 net profit of $4.9 billion by 4%.
Italian banks were the second biggest offenders in 2019, racking up almost $1.5 billion in total fines for sanctions violations and global data protection regulation breaches.
The report also identified that two-thirds of all fines issued by U.S. regulators were aimed at European financial institutions for AML breaches and sanctions violations with countries such as Iran, Cuba, North Korea, Sudan, Libya and Myanmar, Asset Servicing Times said.