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Global Financial Institution Penalties decline in H1 2022

Dublin, London, New York – August 24th 2022 – Fenergo, the leading provider of digital solutions for client lifecycle management (CLM), today released its half year annual findings on global financial institution enforcement actions which show the total value of penalties have falling by a quarter (25%).  

In the first half of the year enforcement actions to financial institutions and their employees totalled $1.6 billion for non-compliance with Anti-Money Laundering (AML), Environment, Social and Governance (ESG) and data privacy regulations, in comparison to $2.112 billion. in H1 2021. The total volume of fines levied against financial institutions for compliance breaches was approximately 183 compared to 306 in the same period the year prior. This is the first-time regulators have acted for ESG-related failings. The Securities and Exchange Commission (SEC) issued a major US financial institution with a $1.5 million penalty for omissions and misstatements about ESG.

North America saw by far the single biggest regional increase in the value of financial penalties from over $1 billion ($1,543,425,008) in H1 2022, compared to $701,459,014 in H1 2021. At just under $18 million, the UK came a distant second – although this figure is way down on the $32,659,931 recorded this time last year. 

Global energy trading and commodities giant Glencore paid the single biggest penalty ($1.1 billion), for a series of foreign bribery and market manipulation schemes. Second on the list was the USAA Federal Savings Bank, a century-old institution that mainly does business with U.S. military veterans – which was fined $140 million for failing to follow anti-money laundering regulations. While in the UK the Financial Conduct Authority (FCA) dished out the biggest penalty to insurance broker JLT Specialty, at $9.4m, for alleged financial crimes including bribery. 

The first half of 2022 also saw the continued rise of crypto firms being targeted by regulators – with BlockFi agreeing to pay one of the largest ever penalty assessed in a crypto enforcement action ($100 million) for failing to register its *interest-bearing lending product with the regulators.. This is the second year running where a crypto firm has been hit with a penalty of $100 million – indicating the increasing rise in market abuse across the burgeoning asset class. 

“The decrease in the value of enforcement actions seen in the first half of this year is a result of a continued backlog from the pandemic. This had a huge impact in the velocity of regulatory investigations,” said Ned Kulakowski, Financial Crime Consultant at Fenergo. “That said, even accounting for COVID, the sheer size of some of the penalties being paid suggest that financial institutions, especially in the US, need to be doing much more to manage the financial crime risks to which they are exposed. Without strong AML/KYC systems and controls that allow financial institutions to not only know their customer and the associated risks, but also understand their behaviour throughout their lifecycle, criminals will continue to exploit any deficiencies.”