Global risk management and security auditor Duff & Phelps has published its latest ‘Global Enforcement Review’, documenting international developments related to monitoring AML activities and tracking the progress of enforcements against financial crimes.
In its research, Duff & Phelps has maintained a database tracking fines issued by financial regulatory agencies, monitoring national incumbents activities with regards to AML management, due diligence, transaction monitoring, systems and controls, account auditing and record keeping.
In the first half of 2020 trading, Duff & Phelps reported that global financial regulatory fines increased to $706 million, a significant 59% increase on 2019’s comparative figure of $444 million.
Despite the steep increase, Duff & Phelps underlined that global regulatory fines are dwarfed when compared against 2018 comparatives – a year in which US investment banks Goldman Sachs, Bank of America and Chase Bank settled individual $1 billion fines with the SEC in relation to 2008 subprime crash record-keeping and reporting failures.
In its ‘breakdown of failings’ segment, Duff & Phelps reported that the majority of fines issued by regulatory authorities are related to due diligence reporting as well as AML management and monitoring failures (35%).
A breakdown of UK records revealed that UK money laundering fines had totalled $37 million during the first half of 2020. Meanwhile, Sweden’s Finansinspektionen financial regulator has sanctioned a recorded $560 million fines to Scandinavian banks SEB, DNB and Swedbank after they were found to be implicated in AML failings attached to Sergei Magnitsky Russian tax fraud scandal.
Duff & Phelps stated that within the UK and Europe, some of the most consistent failings were in AML management, regulatory reporting, customer standard due diligence and suspicious activity monitoring.
Commenting on the report findings, Nick Bayley, head of the UK Regulatory Consulting at Duff & Phelps stated: “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.
“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.
“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.”