Report: Financial services fines drop 49 percent in 2021

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.