APAC region saw single biggest regional increase in 2020
Qinthara Fasya | 17 June 2021
Fenergo, the leading provider of digital transformation, customer journey and client lifecycle management (CLM) solutions, today released its findings on global financial institution fines which show that in 2020, penalties have totaled $10.6 billion for non-compliance with Anti-Money Laundering (AML), Know your Customer (KYC), data privacy and MiFID (Markets in Financial Instruments Directive) regulations. In APAC, the total of enforcement actions aimed at financial institutions and individuals increased from $6,621,692 in 2019 to $5,180,199,367 in 2020.
Notable findings of the annual report:
- Landmark action against Goldman Sachs totalling $6.8 billion (from multiple regulators) for its involvement in 1Malaysia Development Berhad (1MBD) scandal – including the second biggest enforcement action imposed against one bank since 2015
- Major Australian bank fined almost $1bn for its money laundering scandal with links to serious crimes
- People’s Bank of China issued 733 fines at $97 million for AML failings – APAC data privacy fines amounted to $6.9 million.
“2015 was a record year for enforcement actions but 2020 has the potential to match or top that year’s total if significant investigations are concluded by the end of the calendar year. There have been two notable shifts, APAC has overtaken the US in terms of the value of enforcement actions for the first time since 2015 – driven by recent FATF activity and the repercussions of the 1MDB scandal, and there has been an increased focus on individuals being penalised than we have seen in previous years. In addition to imposing penalties on financial institutions, regulators and authorities in China, the UK and the US have held individuals accountable for compliance failings. While banks may hold reserves explicitly to settle enforcement actions, individuals will suffer a far greater personal impact. This along with greater whistleblowing protection and incentives will make a difference in tackling the industry-wide issue of financial crime.”
Regulators in APAC, including the Malaysia Securities Commission and AUSTRAC in Australia, were among those handing out the biggest enforcement actions to banks involved in the 1MBD scandal and the Australian bank embroiled in a high-profile money laundering scandal. However, the U.S. Department of Justice was also more punitive this year, issuing enforcement actions totalling $1,924,071,850 to Goldman Sachs, Bank Hapoalim and Union Bancaire Privée.
“It is estimated that fewer than 1% of criminal funds laundered through the financial system gets confiscated by authorities. The recent FinCEN files have proven that the industry must work better together to address this growing problem. We must establish a common best practice and replace onerous manual Know Your Customer (KYC) and Anti Money Laundering (AML) risk assessment and compliance processes with technology and tools that enable financial institutions, authorities and non-financial firms to better detect and prevent financial crime.”
Countries that issued the most fines by value:
- Malaysia $ 3,900,000,000
- Australia $ 921,587,910
- Singapore $123,075,897
- Hong Kong $107,806,257
- China $100,104,187
- India $15,689,920
- Pakistan $11,713,330
The number of data privacy fines issued in the APAC region increased significantly with a large $529,027 fine issued in India and seven fines issued in China totaling $6,338,969.
Join our experts discussing global financial institutions and individual enforcement actions for 2020 here. To view global fines since 2008 click on this infographic and click here to watch Fenergo’s recent webinar on the FinCEN files scandal.
Fenergo is the leading provider of digital transformation, customer journey and client lifecycle management (CLM) solutions for financial institutions. Its software digitally transforms and streamlines end-to-end CLM processes – from regulatory onboarding, data integration, client and counterparty data management, client lifecycle reviews and remediation, all the way to client offboarding. Fenergo is recognised for its in-depth financial services and regulatory expertise (from a team of over 30 global regulatory specialists), community-based approach to product development. The CLM solutions and out-of-the-box rules engine ensure financial institutions are future-proofed against evolving Know Your Customer (KYC), Anti-Money-Laundering (AML), tax and OTC derivatives-based regulations across 100 jurisdictions. Fenergo recently expanded into new markets including asset and wealth management, private, retail, business and commercial banking and has over 80 global clients.