2020 AML fine values already surpass 2019

Duff & Phelps has launched its seventh annual Global Enforcement Review. The report found that H1 2020 has seen an uptick in AML fine values globally totalling $706 million compared to 2019’s full-year-total of $444 million.

However, the global totals of AML fines in 2019 and H1 2020 are down on the two previous years (2018: $3,297 million, 2017: $2,136 million) and still below the yearly average of fine levels for the four-year period from 2015 to 2018, $1,871 million. Interestingly, the sharp drop in AML fine values between 2019 and 2018 came despite only a small drop in the number of cases—a decrease of just 14{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in the number of significant cases.

“Despite the uptick in AML fine amounts in 2020 we are still seeing fewer massive fines being imposed in the United States.  This is very unlikely to reflect regulators attaching any less importance to AML compliance, it may simply be that the very largest financial institutions may be beginning to get their AML compliance in order, at last,” explains Nick Bayley, Managing Director, Head of UK Regulatory Consulting at Duff & Phelps.

“Although we do see some big institutions repeatedly receiving major fines for their AML failings, the sheer size of the fines that have been imposed for these failings and the associated huge cost of remediation means many have seemingly now learned their lesson.”

The report found that the US represents a much-reduced proportion (12{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}) of the global total in 2020 than in previous years, as regulators elsewhere impose their own mega-fines. In 2019, the US imposed the highest total value of AML fines ($199 million), accounting for 45{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} of the global total. In 2018, the US accounted for 58{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} of total global AML fines, 72{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in 2017 and 97{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in 2016.

These findings suggest that whilst US regulators may have moved on from the mega-fines they imposed in previous years, AML remains an absolutely key focus for regulators globally.

“For many years, US authorities have dominated the global AML landscape, through the imposition of numerous huge fines for AML failings,” continues Bayley “But that is beginning to change, with other jurisdictions, like Sweden, the UK and the Netherlands, recently imposing their own mega-fines.”

The report also highlights the four key AML failings from 2015-2020 that regulators across the world have consistently identified through the fines they imposed:

• Customer due diligence (115 significant cases)
• AML management (109 cases)
• Suspicious activity monitoring (82 cases)
• Compliance monitoring and oversight (62 cases)

“Interestingly, looking at the key AML failings that are identified by regulators, we see the same areas being sanctioned again and again. This is consistent for regulators across the globe and also over the past five years.”

“Firms should pay attention to the key AML failings that are consistently identified by regulators globally in their major enforcement actions. Despite the repeated messages in these enforcement cases it’s clear that market participants are continuing to struggle with their obligations in relation to client due diligence, transaction monitoring and AML management and oversight.”

“AML is probably the only compliance area that has consistently been the subject of major enforcement action by multiple regulators across the globe. This is something that we certainly don’t see changing in the years to come,” concludes Bayley