More than $5bn in fines levied on financial institutions globally

Financial institutions were fined a combined $5.4 billion (€4.7 billion) in penalties last year, with Irish stockbroking firm Davy among those penalised.

New figures from Irish fintech Fenergo show enforcement actions totalled $5.4 billion for non-compliance with anti-money laundering (AML) and data privacy regulations.

This is almost half the $10.6 billion levied a year earlier, although that included a $698 million settlement arising from the 1Malaysia Development Berhad scandal.

Notable enforcement actions in 2021 included the €1.8 billion levied on Swiss bank UBCS by a French court. The bank last month filed an appeal with France’s supreme court against a decision by a Paris court that upheld the conviction for money laundering, while slashing the €4.5 billion penalty imposed in an earlier trial.

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In the United States, regulators issued $673.2 million in enforcement actions to foreign banks, including a $100 million fine on the UAE's oldest private bank, Mashreqbank, for illegally processing more than $4 billion of payments linked to Sudan.

Closer to home, Davy was hit by a €4.1 million Central Bank fine in relation to a bond deal where a group of 16 staff, including senior executives, sought to make a profit without telling the client or the firm's own compliance officers.

This fine was significantly higher than the €1.7 million levied on Bank of Ireland a year earlier for breaches of MiFID regulations.

The total volume of fines levied to financial institutions for compliance breaches was about 176, compared with 760 in the same period the year prior. The average fine value for AML-related compliance breaches issued was $34.4 million.

The large rise in the value of financial penalties by region occurred in Europe, the Middle East and Africa, where fines jumped from just over $1 billion to $3.4 billion in 2021.

Crypto companies

There was a rise in the number of non-banking financial firms being targeted by regulators last year, with crypto companies BitMEX and BitPay in particular fined a combined $100 million for failing to comply with money-laundering obligations.

Financial institution employees continued to face regulatory scrutiny as well, with 16 individuals fined $16.5 million for their role in AML-related compliance breaches.

In Bahrain, the high criminal court sentenced six Future Bank employees to prison with a fine of $2.7 million each as well for their role the largest money-laundering case to date in the history of the state.

Data privacy fine values for financial institutions fell 82 per cent last year to just $17.4 million. The majority of fines were for GDPR breaches in Europe.