By Chris Dorrell
The total value of fines handed out to banks and financial services firms for financial crime violations slumped in the first half of this year, according to new data. But experts argued regulators aren’t going easy on wrongdoers.
According to data from compliance firm Fenergo, regulators worldwide issued 97 financial crime-related fines in the first half of the year, bringing the total value of fines to $189m, down 88 per cent on last year.
In the same period last year regulators collected over $1.5bn in fines, with the data reinforcing a drop from a global high in 2020, where a total of $10bn in fines were issued.
Fines tend to tick up in the second half of the year as firms attempt to settle their balance sheets ahead of annual reports, experts said.
Rory Doyle, head of financial crime policy at Fenergo said the pandemic investigations backlog might have contributed to the downward trend while firms are also pursuing a more “rigorous compliance posture”.
While the majority of the fines were issued by US regulators, UK agencies issued $14.2m in fines in the first half of this year thanks to AML fines for Al Rayan and Guaranty Trust Bank, up from $10.6m last year.
Large fines to individual institutions made up the bulk of the total with Wells Fargo facing the largest fine, worth $97.8m, for failures on sanctions oversight.
Doug Cherry, financial services and regulatory partner at Fladgate, said that firms should not read too much in to the drop in fines.
“The precise nature and circumstances of any particular breach, as well as the related mitigating and aggravating features will see levels of fines fluctuate,” he said.
Doyle agreed, arguing that despite the decrease “banks should not assume that regulators are taking their feet off the accelerator”.
“Especially in the US, regulators are demonstrating a focus on scrutinising larger institutions for serious violations, instead of levying enforcement actions on many organisations, no matter the violation,” Doyle said.
In fact, US institutions paid out 83 per cent of the total fines for the period despite making up just ten per cent of enforcement action.
“Regulators are clearly looking to take high-profile enforcement action and to impose financial penalties of a nature and scale that represents a genuine punishment to the recipient and which sends a message of deterrence for specific misconduct, and more generally,” Cherry said.
Crypto fines made up a third of the global total. Additional regulations in the space could lead to further fines in the coming years, with US regulators expected to announce extra anti-money laundering controls for crypto firms later this year.
