Financial institutions have strict rules and guidelines to follow. There is no room for interpretation, mainly where KYC and AML rules are concerned. Yet, for some reason, these institutions were fined $2.2 billion for AML shortcomings in 2020, confirming there is much work to do.
2020 AML Fines Are Steep
It is uncanny to see financial institutions struggle to comply with the essential guidelines in 2020 and beyond. Anti-money laundering requirements, or AML rules, have been in place for several decades. While they become stricter over time, there is no reason why banks and other service providers cannot adhere to them.
Unfortunately, regulated institutions still struggle to uphold AML guidelines. Things have grown progressively worse, as levied fines increased by roughly 500% from 2019 to 2020. It is not a good trend, although one must wonder whether $2.2. billion in fines sends the right message. More specifically, it is minimal for banks and other organizations to pay for such wrongdoings.
Making matters worse is the tren for 2021. While one would expect financial institutions to learn from these developments, they do not appear to step up their game. Instead, the number of fines issued in the first half of 2021 has proven rather high. A total of 17 fines were issued in that period, and the overall “value” per fine is rising too.
Kroll’s Claire Simm comments:
“The figures show that investigations were not paused for Covid-19. While the number of fines remained constant, the value of fines surged as regulators imposed tougher penalties, continuing to send the message that despite any obstacles, enforcement remains a top priority for non-compliant behavior. These fines show that across the world, regulators continue to put high importance on financial crime enforcement. We can expect to see mega-fines and criminal enforcement continue through 2021 and beyond.”
While fines are necessary, they seemingly matter very little to financial institutions. Nor do they change the way these companies handle their day-to-day operations, which is extremely problematic. Going beyond fines, revoking licenses may be the next option to explore. Whether things will ever come to that, remains unlikely, but it might get the message across. AML guidelines are there to be respected in any circumstance.