The value of penalties against global financial services firms in 2021 dropped to half the total levied in 2020, according to research by compliance technology provider Fenergo.
Enforcement actions against financial institutions and their employees totaled $5.4 billion for violations of anti-money laundering (AML) and data privacy regulations, compared to $10.6 billion in 2020, Fenergo found. The number of fines against financial institutions for compliance breaches (176 in 2021) was less than a quarter of the total for the previous year (760).
The average fine value for AML-related compliance breaches in 2021 was $34.4 million, Fenergo said. Data privacy fine values were down 82 percent at $17.4 million, the majority ($11.5 million) of which were for General Data Protection Regulation (GDPR) breaches in Europe.
Europe, Middle East, and Africa (EMEA) saw the single biggest regional increase in the value of financial penalties, from $1 billion in 2020 to $3.4 billion in 2021. A fine of 1.8 billion euros (U.S. $2 billion) against Swiss bank UBS for helping wealthy clients evade tax in France accounted for the lion’s share; the penalty was reduced in December from €4.5 billion.
Last year also saw the rise of nonbanking financial firms being targeted by regulators, Fenergo noted. In August, five companies operating the crypto trading platform BitMEX were ordered to pay $100 million by U.S. regulators for violating AML rules.
Regarding financial institution employees, 16 individuals were collectively fined $16.5 million in 2021 for their role in AML-related compliance breaches. Six employees from Iran’s Future Bank each received fines of 1 million Bahraini dinars (U.S. $2.7 million) in a July ruling from Bahrain’s High Criminal Court.
Rachel Woolley, global director of financial crime at Fenergo, said in a press release the decrease in fines last year is “largely attributed to a reduction in the number of multi-billion-dollar fines compared to previous years.” She added the pandemic has also impacted regulatory investigations, since regulators were unable to initiate as many on-site probes.
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