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Global Crypto AML & Regulatory Fines Surge in 2022

Dublin, London – 19th January 2023 – Fenergo, the leading provider of digital solutions for client lifecycle management (CLM), today released its annual findings on global financial institution fines, which show that the number of penalties issued for crypto sharply rose in 2022. 

Fines to crypto financial institutions and their employees reached $193 million, rising by 92% when compared to 2021. The recent enforcement action (January 2023)  issued by the New York State Department of Financial Services (NYDFS) to Coinbase of $100 million for AML failures highlights the importance of regulatory governance and solid procedures and processes for AML compliance.

Fines to individuals increased by 89% from approximately $16,505,264 in 2021 to $31,209,191 in 2022 – largely a result of crypto-related fines. The largest individual fines were issued by the Commodity Futures Trading Commission (CFTC) to three co-founders of BitMEX totalling $30 million for AML and other violations.

Following a similar trajectory, 2022 saw the first fines issued concerning ESG. The penalty of $1.5 million was issued to BNY Mellon Investment Advisor Inc. In May 2022 by the Securities and Exchange Commission (SEC) for misstatements and omissions on ESG considerations for certain mutual funds that it managed. The SEC also fined Goldman Sachs Asset Management (GSAM) $4m for policies and procedures failures involving ESG investments. 

Commenting on the findings, Rory Doyle - Financial Crime Policy Manager at Fenergo, said:

“Our data highlights interesting patterns emerging from the crypto industry which is attracting mounting regulatory scrutiny. Recent scandals such as the fall of FTX and the Coinbase fine reinforce the value of regulatory governance and a prudent financial system which helps deter illicit behaviour that in the long term negatively impacts society. While we are seeing a higher standard of compliance across established financial institutions, the crypto industry has a lot of catching up to do. 

As crypto becomes increasingly integrated into the traditional financial ecosystem, our research reinforces the critical importance of effective client due diligence for KYC and a cross-border, collaborative approach to combatting financial crime. Harnessing technology and data that informs and can be acted upon will help prevent financial crime and, ultimately, reduce the risk of enforcement action.”

Fenergo are hosting a webinar to review Financial Institution Fines & Enforcement Actions for 2022 on February 16.