Anti-money laundering fines surge 50%

Global fines for failing to prevent money laundering and other financial crime surged more than 50% last year, fuelling warnings that such penalties are not curbing the behaviour and systems flaws that allow criminals to channel money through the global financial system. Banks and other financial institutions were fined almost $5bn for “anti-money laundering” infractions, breaching sanctions and failings in their “know your customer” systems in 2022, bringing the total since the global financial crisis to almost $55bn, data from compliance firm Fenergo shows.

The 2022 surge marks a rebound from a fall the previous year, raising questions over the effectiveness of a global crackdown on financial crime in the wake of the 2008 crisis, when authorities started issuing large fines in an effort to compel beleaguered banks to do more to protect the financial system from criminal misuse. This year, the US has been the most aggressive imposer of penalties, chalking up $37bn of the fines, followed by roughly $11bn in Europe, the Middle East and Africa, and just over $5.1bn in Asia-Pacific, according to the Fenergo data.

Fines typically come several years after infractions, so the latest figures do not capture financial institutions caught offside by the glut of sanctions introduced in the wake of Russia’s assault on Ukraine last year. Despite the fines, companies usually put more resources into compliance and monitoring but remediations could be “quite poorly enforced and monitored both within the firm and by the regulators themselves”, said McCartney.

This data raises concerns that fines alone may not be enough to deter financial institutions from committing crimes such as money laundering. Despite increased efforts to curb financial crime in the wake of the 2008 crisis, the recent surge in fines indicates that more needs to be done to address the root causes of the problem and ensure that regulations are effectively enforced.

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