over $352.5 million of fines handed out globally in last four months

by | Sep 16, 2019 | All Blog Posts, industry news, Featured

Encompass, a fast-growing provider of intelligently automated Know Your Customer (KYC) solutions, recently carried out an analysis of Anti-Money Laundering (AML) related penalties handed down between 1 May and 31 August 2019.
Key observations from the analysis are as follows:

  • 20 AML penalties were handed down globally, totalling over $352.5 million
  • in the same period in 2018, four fines totalling $707 million were handed out
  • $339.3 million of fines given to banks and $13.1 million to firms in other industries ($50,000 to an individual)
  • the largest monetary fine was $336 million and the average was $18.5 million
  • Seven fines given out were over $1 million
  • One business not given a monetary fine but instead shut down completely
  • AML fines incurred by three gambling and gaming companies in the UK, with the highest being $7.2m
  • Penalties handed down by regulators across multiple jurisdictions beyond the USA and UK: these were Belgium, Latvia, Norway, India and the Netherlands

This takes the total value of AML fines this year, from 1 January to 31 August 2019, to $8.07 billion – approximately 4.3 times the amount handed out over the same period last year ($1.87 billion).

the Encompass view

As 2019 runs on, we have seen yet another fine in the hundreds of millions, and we expect to see more large penalties over the remainder of the year. As we have noted previously, multi-million dollar fines are commonplace these days, as evidenced by the fact that seven of the 20 penalties given out from May to August were $1 million or higher.

In the year to date, around two-thirds of AML penalties were given to banks, but approximately a sixth were imposed on companies in the gambling/gaming and cryptocurrency sectors – highlighting the increasing attention these industries are getting as channels for money laundering. We expect to see this shift to non-financial services businesses continue in the future.

Large AML fines are often predominantly associated with the US and UK, since both countries have transparent regulatory cultures and active regulatory bodies, but in the last four months we have seen activity from regulators in multiple jurisdictions, with the largest fine originating from Belgium. This serves to show the importance being placed on the identification and prevention of money laundering at a global level. Given the current pace, we still think there is a good chance that 2019 could break the record set in 2014 for the highest value of AML fines given out in a year.

the Encompass view

As 2019 runs on, we have seen yet another fine in the hundreds of millions, and we expect to see more large penalties over the remainder of the year. As we have noted previously, multi-million dollar fines are commonplace these days, as evidenced by the fact that seven of the 20 penalties given out from May to August were $1 million or higher.

In the year to date, around two-thirds of AML penalties were given to banks, but approximately a sixth were imposed on companies in the gambling/gaming and cryptocurrency sectors – highlighting the increasing attention these industries are getting as channels for money laundering. We expect to see this shift to non-financial services businesses continue in the future.

Large AML fines are often predominantly associated with the US and UK, since both countries have transparent regulatory cultures and active regulatory bodies, but in the last four months we have seen activity from regulators in multiple jurisdictions, with the largest fine originating from Belgium. This serves to show the importance being placed on the identification and prevention of money laundering at a global level. Given the current pace, we still think there is a good chance that 2019 could break the record set in 2014 for the highest value of AML fines given out in a year.

Wayne Johnson | CEO and co-founder, encompass
methodology
The underlying data for this analysis was supplied by Dr. Henry Balani, a financial industry advisor to Encompass. All data was compiled from reputable national news sources and cross referenced against regulator website where available. Penalties and actions from active jurisdictions where cross-border financial transactions are high were included in the research. While occasionally there are smaller, less active jurisdictions or agencies that impose penalties, these amounts are typically smaller and do not necessarily affect overall trends and were not included in this research
Dr Henry Balani | encompass industry advisor

about Dr Henry Balani

INDUSTRY ADVISOR

Dr. Henry Balani is currently Principal at Blockchain Advisory Institute, where he advises companies on using the Blockchain to drive innovation in the real estate and the financial services sector. Dr. Balani is a noted industry commentator on issues leveraging the Blockchain, Digital Assets, Sanctions and Regulatory Compliance. As a published academic, Dr. Balani also lectures on international business, economics and regulatory compliance courses globally. At Accuity, a division of the RELX Group (formerly Reed Elsevier) he was responsible for driving Blockchain partnerships and thought leadership in the financial services industry.

Dr. Balani holds a Doctorate in Business Administration from the University of Wisconsin, an M.B.A. from Northern Illinois University in the USA and B.S. in Economics, International Trade and Development from the London School of Economics.

Connect with Dr. Balani on LinkedIn and Twitter.

about encompass

Founded in 2012 by entrepreneurs Roger Carson and Wayne Johnson, Encompass is the creator of unique, innovative Know Your Customer (KYC) automation software that enables better, faster commercial decisions. The company is driven by the belief that the best decisions are made when people understand the full picture, fast.

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