19 January 2023

FT: Anti-money laundering fines surge 50%

Global fines for failing to prevent money laundering and other financial crime surged more than 50 per cent 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.

 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. 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.

“There’s a lot of evidence, particularly in the UK and the US, in terms of recidivism . . . repeat offending by the big firms after they’ve been fined for things,” said Huw McCartney, a professor at the University of Birmingham and co-author of a 2019 study of the impact of post-crisis fines on the Anglo-American banking markets. McCartney said that in the wake of 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”....

 more at  FT

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