2008-2018: Assessing the Impact of Global AML & Sanctions Fines

Since the financial crisis started in 2008, financial institutions around the world have had to deal with regulation after regulation being introduced to increase transparency and to create a safer, robust and more transparency transparent financial system. Between 2009 and 2012 alone, more than 50,000 regulations were published across the G20 (Group of 20), with almost 50,000 regulatory updates being made in 2015 alone.

Fenergo has compiled a rich database of monetary penalties and enforcements imposed by global regulators around the world for financial institutions violations against AML, KYC and sanctions regulations. This analysis measures the financial impact that has hit banks that this has had on financial institutions across the world over the last ten years, since the onset of the financial crisis. The findings, while not surprising, pack a punch when considered in their totality.

The main finding is that over the past ten years, regulators across the North American, European and APAC regions have issued nearly $26 billion dollars in AML/KYC and sanctions-related fines.

In the wake of the 2008 financial crisis and subsequent high-profile scandals, global regulators are increasingly putting financial institutions’ AML and KYC procedures, policies and technologies under the microscope. This is clearly reflected in the significant monetary penalties that have been imposed on financial institutions worldwide for anti-money laundering violations.

Inadequate customer due-diligence procedures and the lack of cohesive, global AML compliance programs were commonly cited as major failings of the penalized institutions. In terms of sanctions violations, screening processes that willfully ignored the status of sanctioned entities are a recurring theme in our research.

Regional Snapshot

On a regional level, the US has levied 91% of all global AML, KYC and sanctions-related fines from 2008 to 2018, totaling $23.52 billion. The US Department of Justice (DOJ) was responsible for the highest enforcement action issued worldwide over the past decade, an $8.9 billion penalty against a Tier 1 French bank in 2015.

Europe follows closely behind, with $1.7 billion issued in fines over the ten-year period. 2018 has been a record year for AML fines in the region with a total of $903 million levied, including the highest European AML fine of the past decade, totaling $900 million which was levied by Dutch authorities.

In APAC, AML-related fines totaling $609 million have been issued in the last 10 years. 2018 has heralded a new 10- year record for enforcement in the region with nearly $541 million issued in fines within the first eight months of the year, including the largest fine in Australian corporate history. The fallout from the 1MDB scandal and increased international focus has also contributed to heightened enforcement activity since 2016. There is a notably intensified appetite from Singapore and Hong Kong financial regulators to safeguard their respective financial systems by bolstering AML, KYC efforts.