Regulatory penalties for global financial institutions surge 31% in H1 2024

NEW YORK, LONDON, DUBLIN – AUGUST 15, 2024 – Fenergo, the leading provider of digital solutions for know your customer (KYC), transaction monitoring and client lifecycle management (CLM), today released its half-year annual findings on global financial institution enforcement actions, revealing a 31% surge in the value of fines issued in H1 2024 compared to H1 2023. Asia-pacific firms saw the biggest rise in penalties imposed, totalling over $46m – a 266% increase compared with H1 of 2023. 

Global financial regulators levied 80 fines in the first half of 2024, totalling $263,252,003 for non-compliance with anti-money laundering (AML) regulations, including know your customer (KYC), sanctions, suspicious activity reports (SARs), and transaction monitoring violations. In the same period last year, regulators issued over $201m in penalties for the same types of violations. The findings – which relate to enforcement actions spanning EMEA, North America and Asia Pacific – indicate a multi-year trend of increasing fines, as watchdogs continue to crackdown on illicit behaviour across the globe. 

The highest value fine in 2024 thus far, at $65m, was issued to the US subsidiary of a Canadian bank following unsafe practices related to operational, compliance, and strategic risk management controls. The bank was ordered to pay the fine to resolve investigations by The Office of the Comptroller of the Currency (OCC), an independent bureau of the US Department of the Treasury.

The most significant increase in enforcement action values relate to AML which increased by 87% to $113.2 million while penalties specifically for transaction monitoring and SAR breaches, increased to a staggering $30.5m over the last six months, up from $6m. Following a similar trajectory, fines for breaches to regulations related to politically exposed persons (PEPs) came in at $26 million and KYC fines increased by 102% reaching a record high of $51m in H1 2024. In terms of sectors, banks were on the receiving end of the most stringent enforcement actions at $136 million followed by digital asset providers ($49.3m), payments firms ($40m) and private banks ($32.1 m).

Historically, the second half of the calendar year has seen an uptick in enforcement actions, with financial institutions often looking to quickly settle their fines with regulators ahead of year-end reporting.

Commenting on the findings, Rory Doyle, Head of Financial Crime Policy at Fenergo, said: “With watchdogs increasingly deploying highly sophisticated technology to more effectively identify wrongdoing, the surge in enforcement actions in H1 seems unlikely to abate in H2. Financial institutions must take this extremely seriously. These penalties disrupt investor confidence, negatively impact share price, and damage companies’ reputations – consequences many firms, regardless of their size, cannot afford to shoulder. 

“To safeguard themselves against the growing risk of watchdog fines, financial institutions must ensure their AML and KYC capabilities are as robust as possible. There can be no downplaying the importance of integrating smarter financial crime technology to enhance processes in this context – particularly as firms continue to grapple with a talent shortage for financial crime professionals. Financial institutions that fail to take the necessary precautions, whether large or small, could find themselves in regulators’ crosshairs before the year is up.”