Anti-money laundering (AML) programs are a collection of procedures used within financial institutions to combat fraud, money laundering, terrorism funding, and other forms of financial crime. AML programs are regulated by the government in different jurisdictions and are directed at financial institutions such as banks, fintech, insurance companies, credit unions, casinos, mortgage companies, and others.
Overall, the following are the primary reasons why regulatory bodies punished banks:
- Inadequate compliance culture, values, norms, and ethics
- Failure to report suspicious activities (SARs),
- Insufficient risk assessment regarding KYC, PEP, and CDD
- AML controls vulnerabilities.
Failures in a bank's AML framework, such as failing to create governance, developing policies that staff grasp, adopting a risk-based strategy, or getting comprehensive and clear information on clients, beneficiaries, and transactions. Noncompliance with AML requirements can result in large penalties and possible prison time. Nonetheless, each year, insufficient AML compliance results in harsh penalties and a loss of reputation for businesses all over the world.
The Penalized Bank List of 2021
AmBank
Fine: $700,000,000
Malaysian bank, AmBank has agreed to pay the Malaysian government $700 million for its part in the 1MDB scandal. The Saudi royal family paid $681 million to former Malaysian Prime Minister Najib Razak in one account. Razak was convicted of money laundering and corruption related to the 1MDB embezzlement conspiracy. The high penalties are anticipated to damage AmBank's profits.
Takeaway: Report PEP transactions and suspicious activities to the regional banking intelligence organization.
Capital One
Fine: $390,000,000
The US Treasury's Financial Crimes Enforcement Network (FinCEN) penalized Capital One for deliberate and careless breaches of the Bank Secrecy Act. FinCEN discovered Capital One failed to notify thousands of suspicious activities and transactions. From 2008 to 2014, millions of dollars in suspicious transactions were unreported in a cash-checking unit. Unreported trades totaled over $16 billion.
Deutsche Bank
Fine: $130,000,000
Deutsche Bank obliged to accept to pay over $130 million for Foreign Corrupt Practices Act (FCPA) violations. The US Securities and Exchange Commission (SEC) concluded that a German bank paid over a million dollars in bribes and millions more in consultants to boost its global operations.
Takeaway: To prevent bribery and corruption, banks must have anti-bribery policies and procedures in place. To tackle crime, senior leaders must set the standard.
11 Banks in UAE
Fine: $12,500,000
The UAE central bank fined 11 banks a total of $12.5 million for AML violations. In 2019, the unnamed Banks were found to have poor money laundering and terrorism funding controls.
Takeaway: AML frameworks and controls must be competent to cope with an ever-changing regulatory context.
Apple Savings Bank
Fine: $12,500,000
Apple Bank for Savings paid a $12.5 million penalty to the FDIC for breaching the Bank Secrecy Act. Apple Bank for Savings failed to comply with the FDIC's directive to upgrade its AML compliance procedures. Between April 2014 and September 2018, there were infractions.
Takeaway: Failings uncovered during regulatory inspections must be corrected promptly.
ING
Fine: $3,600,000
The French AML authority, the Autorité de contrôle prudentiel et de résolution (ACPR), penalized ING for AML and counter-terrorist funding failures. That ING had no comprehensive information on the payers and payees of credit transfers that exceeded payment thresholds was determined by the regulator.
Future Bank
Fine: $2.650,000 each
A Bahraini court convicted five Future Bank officials to five years in jail and $2.65 million fines for money laundering. Bank Saderat and Bank Melli, both subject to harsh financial and economic restrictions, own Future Bank. The executives hid and stripped information from transactions while sending money across the SWIFT network to mask the cash's origin and recipient.
Deutsche Bank and Discovery Life
Fine: $1,921,695.16
The SARB fined Deutsche Bank and Discovery Life for failing to comply with the Financial Intelligence Centre Act (FIC Act), prohibiting money laundering and terrorism funding. The central bank stressed that the bank was sanctioned for poor administration and controls. Discovery Life failed to report cash thresholds. Deutsche failed in both basic and extended due diligence.
Takeaway: Financial fines often come from noncompliance with KYC and CDD procedures and governance. Compliance with regulatory rules can reduce regulatory risk.
ABN Amro Penalty:
Fine: $574,000,000
ABN Amro agreed to pay $574 million to settle with Dutch authorities for major AML issues. Criminals exploited bank accounts. "Unlawfully acquired gains" were compensated, prosecutors claim. ABN quadrupled its personnel to detect and investigate suspicious transactions last year. The Dutch bank lost 66 million euros in the first quarter of 2021.
Bank J. Baer
Fine: $79,000,000
The Swiss bank Julius Baer admits to scheming to bribe FIFA officials with about $36 million. The bank was obliged to pay $79 million in fines for its part in the FIFA money laundering case.
Takeaway: Corruption and money laundering can result in criminal prosecution.
DNBA
Fine: $48,000,000
DNB ASA, Norway's largest financial services business, was fined $48.1 million for money laundering violations. It stated a preliminary regulatory check discovered major AML compliance issues. The infractions were under Norway's old money laundering laws, but the penalties were just for AML violations. The bank promised to enhance its AML policies.
Takeaway: To prevent financial crime, a bank's AML framework, strategy, and processes should be continually evaluated and enhanced.
Rietumu
Fine: $6,900,000
Rietumu Banka was fined $6.9 million for AML and counter-terrorism offenses. The FCMC investigated in 2019 to examine if the bank's internal controls and systems could detect and mitigate risks locally. The bank's risk assessment of payment service providers was determined to be inadequate.
Swedbank
Fine: $5,500,000
Nasdaq Stockholm fined Swedbank AB $5.5 million for AML breaches and regulations violations on disclosure and classification of inside knowledge. The committee claimed Swedbank broke its own rules by not categorizing money laundering material generally known to senior management.
Deutsche Bank AG
Fine: $1,960,000
During a 2019 examination, The South African Reserve Bank (SARB) detected flaws in Deutsche Bank's AML internal controls. The bank failed to comply with the Financial Intelligence Act's standards for client due diligence, expanded due diligence, maintaining records, and AML and CTF management.
Bank J. Safra Sarasin
Fine: $ 1,000,000
The Singapore Monetary Authority (MAS) fined Bank J. Safra Sarasin (BJS), a private Swiss bank, $1 million for non-compliance with AML and counter-terrorism funding requirements. The infractions occurred between March 2014 and September 2018 and required serious client onboarding and continuous relationship monitoring. To comprehend the logic behind several high-value transactions with no economic purpose, BJS failed to identify and verify wealth and funding sources.
4 Banks of Pakistan
Fine: $614,880
The State Bank of Pakistan (SBP) fined four of the country's top banks $614k. Non-disclosure agreements, customer due diligence, anti-money laundering, and foreign exchange regulations were all violated by the banks.
Citibank Taiwan & DBS Bank Taiwan
Fine: $357,194 & $214,302
The Taiwanese Financial Supervisory Commission (FSC) fined Citibank Taiwan and DBS Bank Taiwan for failing to assess money laundering risks and detect suspicious conduct. Citibank Taiwan overlooked Taiwanese transaction categories connected to criminal profits. Low or medium-risk consumers with the same billing address and contact data as transactions from high-risk areas were disregarded. The transaction monitoring system also omitted high-value transactions, which was against AML standards.
[email protected]
Fine: $420, 000
Malta's Financial Intelligence Analysis Unit (FIAU) punished online bank [email protected] Plc for a series of AML violations, including passport sales and coins linked to criminal organizations. Due diligence for high-risk consumers was not performed, and media alerts pointing to criminal ties were ignored. In sixteen bank files, [email protected] Plc did not collect any transactional information, and in four more, it did not gather enough transactional information.
Sapien Capital Limited
Fine: $248,000
The FCA fined Sapien Capital Limited $248,000 for failing to prevent financial crime and money laundering related to Cum-Ex trading. Sapien Capital conducted almost £6 billion in trades for Sanjay Shah's Solo Capital organization, a major role in a $1.6 billion worldwide tax evasion scam. A total of 25 defendants have been charged in the UK, Germany, and Denmark.
Baramati Sahakari, Mogaveera, and Indapur Urban Cooperative Banks
Fine: $299,000
The Reserve Bank of India fined three Indian banks (RBI) that were penalized for not complying with KYC requirements. The Baramati Sahakari Bank was also punished for breaking the rules and regulations.
Intertrust
Fine: $271,914
The Cayman Islands Monetary Authority (CIMA) fined a major corporate services provider for AML violations. Intertrust's history of noncompliance is longstanding. These failures included identifying ultimate beneficial owners (UBOs), gathering documents, validating the source of funds, determining the sort of company, and monitoring clients.
Takeaway: Compliance teams should gather paperwork and validate UBOs as part of your AML program.
Priority Corp
Fine: $250,000
FINRA fined score Priority Corp $250,000 for failing to create and operate an adequate AML program in compliance with the Bank Secrecy Act. Misconfiguration of the trading platform or customer accounts might lead to AML violations. Score Priority did not specify how often to check foreign accounts or employ reports or automated methods to discover red flags.
Standard Chartered Trust (Guernsey)
Fine: $194,166
Standard Chartered Trust (Guernsey) will have to pay approximately $194,000 in penalties related to onboarding, client due diligence, and risk evaluation practices and systems. The GFSC discovered major concerns with the firm's compliance operations.
BitMex
Fine: $100,000,000
For breaking anti-money laundering (AML) standards and trading cryptocurrencies without regulatory authorization, BitMex agreed to pay a $100 million fine to the Financial Crimes Enforcement Network (FinCEN) and the Commodities Futures Trading Commission (CFTC).
It was discovered that BitMex had facilitated over $209 million in unlawful transactions via darknet markets and unlicensed money service organizations.
FinCEN alleges BitMex's top leadership team manipulated client data to conceal their genuine location and refused to gather more than an email address. BitMex's co-founders are being investigated.
Takeaway: Hiding illicit transactions and failing to collect appropriate information about customers are crimes. Senior directors who fail to comply with AML requirements may face harsh consequences.
Robinhood
Fine: $30,000,000
The New York Department of Financial Services (NYDFS) has agreed to pay $30 million to the cryptocurrency subsidiary of Robinhood Markets Inc.
NYDFS requires firms to have cyber defense systems and backup procedures in case of an attack.
Pilatus Bank Fine
Fine: $5,800,000
The FIAU fined Pilatus Bank $5.8 million for significant and chronic AML violations.
The FIAU expressed worry over the bank's lack of consumer due diligence. In 97 percent of client files evaluated by regulators, Pilatus bank had outdated information, data, and documentation. The bank ignored serious money laundering concerns.
N26
Fine: $5,000,000
The BaFin penalized digital bank N26 for failing to file 50 suspicious activity reports in 2019 and 2020. BaFin had already cautioned N26 and assigned a special commissioner to supervise its compliance with KYC and AML rules.
TSB Bank
Fine: $3,500,000
The high court fined TSB Bank $3.5 million for AML violations. The bank acknowledged it lacked appropriate measures to monitor and mitigate compliance risks.
Bank of China UK
Fine: $2,300,000
Bank of China UK (BOC UK) paid a $2.3 million penalty to OFAC for violating Sudan sanctions. Over 111 commercial transactions totaling over $40 million were processed by BOC UK on behalf of the participants in Sudan between September 2014 and February 2016.
Payoneer
Fine: $1,400,000
Payoneer, a significant provider of online money transfer and digital payment services, has agreed to pay $1.4 million to the US Treasury's Office of Foreign Assets Control for 2,260 sanction violations. On the SDN List, Payoneer was discovered to have handled payments for third parties in sanctioned countries such as Iran, Sudan, Syria, and the Crimea area of Ukraine.
The regulator concluded that Payoneer's sanctions program has issues with screening, testing, transaction review, and compliance audits. There were $802k in transactions for sanctioned persons and nations.
Takeaway: Outdated sanctions blacklist screening filters have punished several regulated and required organizations. Regulated enterprises should continually evaluate and optimize their screening filters to avoid penalties law violations.
Work With Sanction Scanner to Improve Your AML Compliance
With a continually changing regulatory landscape, your AML compliance solution must be able to keep up with both criminals and authorities. Screening for sanctions and politically exposed persons (PEPs) should be part of your compliance policy, both at onboarding and throughout the client's lifetime. It should also have comprehensive transaction monitoring capabilities. Sanction Scanner's AML Solutions are created by AML professionals to assist you in meeting these regulatory duties while also protecting your reputation. If you want to comply with the AML regulations and don't want to be on this list in 2022, you can
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