8 March 2022, 17:31
8 March 2022, 17:31
Millions of people entrust financial institutions with their money. Many of them have no idea of the level of Anti Money Laundering (AML) that takes place, or that it exists within the businesses they’ve used for years.
Governments worldwide collect billions of dollars in fines each year. The penalties get levied against banks and industries with fiduciary duties. These industries include insurance companies, casinos, digital banks, and mortgage companies.
Often, the institutions receiving the fines aren’t engaged in criminal activity. Their actions often occur due to lax oversight and poor training of employees.
Do you want to know the companies that received the largest AML fines and sanctions in 2021? Please keep reading to learn more about their infractions.
The Financial Action Task Force (FATF) is a global organization formed to combat money laundering. The task force creates policies and punishments to curtail widespread misconduct in the banking industry.
The latest policy-making efforts focus on cryptocurrencies. The governing agency ensures virtual assets adhere to the same financial standards as traditional ones. FATF also has implemented strategies to track funding to international terrorist groups.
FATF is a policy-making group, and individual governments enforce the policies. Enforcement includes criminal charges, levying fines, and putting violators on trial. In addition to hefty fines, violators can receive lengthy prison sentences.
Industries saw a significant drop in anti-money laundering fines in comparison to 2020. Fines totalled €2.5 billion (U.S. $2.8 billion) in 2021. A decline of 78% from the previous year indicates that FATF is making great strides.
The largest fine of 2021 didn’t result in damages levied against a bank.
Boeing is the second leading plane manufacturer in the world. The allegations included fraud and conspiracy allegations. They agreed to pay a $2.5 billion settlement to avoid prosecution.
Banks and other financial institutions made up most of the fines. Approximately 17 banks and FinTechs received fines in 2021.
Here are the top offenders.
AMBank is a Malaysian bank involved in the 1MDB controversy. It involved a large payment to Najib Razak, the country’s former prime minister. The payment came from the Saudi royal family.
Razak got charged with money laundering and corruption.
AmBank took a huge hit for its failure to report a Politically Exposed Person (PEP). Reporting gets directed to their regional banking authority.
ABN Amro became prey to criminals who exploited weaknesses in their infrastructure. They settled with Dutch authorities for $574 million. Despite extensive efforts to investigate the suspicious behaviour, the company took a huge hit at the start of 2021. In the first quarter, they lost an estimated 66 million euros.
Detection of the criminal behaviour wasn’t enough to halt the penalties. It demonstrated that their compliance and risk management processes didn’t meet FATF standards.
Capital One got accused of being careless and intentionally violating the Bank Secrecy Act. As a result, they were fined $390 million by FinCEN, the US Treasury’s Financial Crimes Enforcement Network.
The infractions levied against Capital One accused the financial institution of failing to report years of suspicious transactions. The activity occurred between 2008 and 2014 when they acquired numerous check-cashing businesses in New Jersey and New York.
The transactions in question led to $16 billion in unreported trade activity. FinCEN’s Director, Kenneth A. Blanco, referred to the failures at Capital One concerning thousands of suspicious transactions as “egregious.”
Deutsche Bank’s improprieties fall under the Foreign Corrupt Practices Act (FCPA). Officials discovered the German bank paid $7 million in bribes to foreign officials. The bribes included both money and unauthorized services.
The fine levied by the US Securities and Exchange Commission (SEC) came to $120 million.
In another scandal that rocked the bank, German financial regulator BaFin fined Deutsche Bank an additional $10 million. The penalty came in connection to interest rates used in the manipulation of Euribor.
The bank has to place a stronger focus on avoiding corruption at its senior levels and strengthen its anti-bribery policies.
BitMex is a P2P crypto-products trading platform penalized for money laundering. The company and five unlicensed entities under the BitMex platform were charged with unlawful trading.
Prosecutors in the Southern District of New York accused the companies of performing $209 million in illegal cryptocurrency transactions that took place outside of regulatory authorization.
They also accused BitMex of manipulating client data and failing to collect required data on clients. The $100 million fine will go to FinCEN and the Commodities Futures Trading Commission (CFTC).
The BitMex case shows different stages of money laundering that governing bodies can uncover. It’s important to understand money laundering and how to avoid its enticements.
The Swiss bank Julius Baer found itself trapped in a scheme to bribe the Fédération Internationale de Football Association (FIFA) officials. The premise of the scheme focused on gaining broadcasting rights by using marketing firms to bribe soccer officials.
The scheme is another example of money laundering. A BJB relationship manager pled guilty in 2017 for his role and received three years of probation. To avoid prosecution, the bank admitted its role in May 2021.
The bank also agreed to a three-year deferred prosecution for its role in concealing its client’s criminal activity.
BJB received credit in the sentencing process for its ongoing efforts to improve its compliance program.
Robinhood – $30 Million
Robinhood Crypto, the cryptocurrency branch of Robinhood Markets, Inc., got fined in 2021. New York Department of Financial Services (NYDFS) fined them $30 million.
The Consumer Protection and Financial Enforcement division found that Robinhood violated anti-money laundering laws. The company had several infractions, including failure to meet virtual currency and cybersecurity mandates. One infraction dealt with their failure to provide an anti-money laundering program.
The biggest takeaway in these AML cases is the need for increased internal oversite. Without a risk analysis, your company could be in danger of criminal prosecution.
At DX Compliance Solutions, we offer many services to assist your company in addressing compliance and financial regulations. Click here to reach our consultants and learn more about our programs.
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