Financial Crime and Punishment: 2023 in AML Enforcement

2023 saw $6.6 billion in penalties issued to financial institutions (FIs) by regulators across the globe. 

The value of penalties imposed by regulators worldwide on financial firms surged by 57% in 2023. Despite there being a marked increase from 2021’s global ($5.4 billion) and that of 2022 ($4.2 billion) but still fell well short of the mammoth $10.6 billion of enforcement action served to FIs in 2020. 

Fenergo’s annual research report ‘AML Enforcement Actions Surge in 2023’ delves into the findings of 2023’s enforcement data with analysis and expert insights into 2023’s biggest regulatory and financial crime trends.

A panel of experts came together to unpack Fenergo’s report findings in a live webinar ‘2023 in AML Enforcement: Key Penalties Shake Financial Services’. 

The discussion featured a panel of experts who summarized key findings from the report and gave their insights on the reasons behind the sharp rise in fines in 2023 and what areas FIs can expect regulators to focus on in 2024.

Some hard-hitting insights from the session included: 

The surge in AML fines in 2023 was driven mainly by fines on the crypto and payments industries and regulators’ scrutiny is only increasing towards digital-first finance.

“The US in particular has taken a very much enforcement-first approach when it comes to crypto, versus the EU which has been more of a pioneer in launching a crypto regulatory framework under MiCA.” – Farah Khalique, Editor, Banking Risk and Regulation

Large fines are being leveraged to send a message to certain industries to fix compliance gaps and prevent financial crime.

“People have to remember there's a choice of tools in a regulator’s toolbox in response to non-compliance with AML and remember that the fines are about deterrence. It's about ‘don't do it again’ and it's specific deterrence with a general ‘everybody, please don't do this.’” – Samantha Sheen, Subject Matter Expert to the Council of Europe

Asia Pacific saw the sharpest rise in fines but are still in early stages of enforcement as the region is home to predominantly emerging markets and less mature regulatory regimes.

“The percentages (in APAC) are very high is also because we started from a lower base. As with many movements, it usually spreads from the west to the east…I see it as just the beginning of enforcement actions in this region and it's just going to grow over the next couple of years.” - Julia Chin, Head of Compliance, Hugosave

The US was the leading issuer of fines at $5 billion, while fines from European countries had declined significantly since 2022.

“At the end of the day, the United States has some of the best enforcement staff, they are some of the best trained and the best paid globally, with the lowest turnover in some respects globally.” – Samantha Sheen, Subject Matter Expert to the Council of Europe

Personal accountability for senior executives is continuing to be a growing trend, as seen particularly in large fines to CEOs and executives of digital finance firms.

“We're seeing - even at traditional FIS - the ability of personal responsibility for senior MLROs and senior directors as more and more stories are coming through our horizon scanning approach showing personal responsibility.” – Rory Doyle, Head of Financial Crime Policy, Fenergo

This research and data serve to highlight the prevalence of financial crime in the world today. The enforcement of AML and CFT regulations serves as a reminder of our collective responsibility to prevent financial crime and of the progress that’s been made year-on-year towards that goal.

“We should remember the role that we're all playing right now. If you're in this audience today, there's a good chance you have a role to play in helping to fix the cracks in the financial system, as we move forward. That's an incredible responsibility, whether you're here in the United States, Europe, or Asia.” – Greg Johnson, Founder & CEO, Rubicon Digital Assets

Our research into AML and ESG fines highlights that regulators sent a clear message to the digital asset sector in 2023: digital finance is still finance and will be held to the same standards as other financial services.

Moving into 2024, we will see an increased focus on sanctions activity and, with new regulatory bodies in place in various jurisdictions, we can expect increased overall AML activity from 2025 onwards.

As firms seek to navigate an ever more complex socio-political climate coupled with a fast-evolving regulatory environment, automation technology such as Fenergo can help FIs adopt a risk-based approach to compliance and protect against enforcement action. We are committed to developing technology solutions that enable financial institutions to automate AML/KYC processes and remain compliant in multiple jurisdictions.

Access the research report now to uncover how AML enforcement actions surged in 2023.