The “naughty corner” for miscreant banks and other wealth management institutions is a crowded one and reveals compliance to be a major issue for firms these days, both when spending money and recruiting staff. Charges of interbank rate fixing, lax anti-money laundering controls and questionable pricing policies have been levelled at the world’s private banks.

Some of the failings that have been punished go back several years and, as of the time of writing, firms have moved, or say they have done, to clean up their act. Some firms making the headlines are aware of the work they must embark upon to improve their reputation. Other banks have added to risk management teams in recent months, and no doubt will continue to do so.

By way of a guide to some of the problems that have hit these firms, here is a summary of the main regulatory incidents. Not all of the cases mentioned are complete and could be subject to further action. The penalties, and the regulators’ reasons for imposing them, are announced in reverse order.

2016

Falcon Private Bank and others

The Monetary Authority of Singapore said that the operations of Falcon Private Bank in the city state have been closed down as a result of the investigation into its connections with the 1MDB scandal and for “serious failures in anti-money laundering (AML) controls and improper conduct by senior management at the head office in Switzerland as well as the Singapore branch.” The bank was issued with a fine of S$4.3 million ($10.2 million) for 14 offences against the Prevention of Money Laundering and Countering the Financing of Terrorism Act. The statement also detailed failings by DBS and UBS. Fines of S$1 million for DBS for 10 breaches and S$1.3 million for UBS for 13 breaches were issued.

BNP Paribas

BNP Paribas Wealth Management was fined HK$4 million ($515,000) by a Hong Kong regulator for overcharging clients to the tune of about HK$9½ million for a period lasting almost two years. The fine was imposed by the Asian jurisdiction’s Securities and Futures Commission; the behaviour in question related to the period from 1 January 2011 to 31 December 2013. Charges, mark-ups and fees received by the firm from around 2,300 clients were higher than those stated in documents given to customers, the regulator said. Transactions covered different types of investment products, including equities, bonds, structured products, options, swaps and funds.

The SFC said that its fine would have been higher but for the fact that BNP Paribas agreed to use an independent reviewer to examine the charges; its repayment of overcharged amounts; the fact that it reported the matter to the regulator under its own steam, its co-operation with the authorities and its otherwise clean disciplinary record.

BSI Bank

In arguably one of the largest compliance cases in years, and certainly in Singaporean history, the Monetary Authority of Singapore revoked the merchant banking licence of this bank, which is part of Switzerland-headquartered BSI, for a number of infractions of AML laws and for the ‘gross misconduct’ of certain staff. The matter relates to the corruption scandal that has plagued Malaysia's state-run 1MDB fund.

Julius Baer

The bank agreed to pay a penalty of $547 million after admitting to helping American clients hide billions of dollars in offshore accounts. Julius Baer admitted to its actions in a detailed statement and US prosecutors agreed to drop charges after three years if the bank abides by the terms of the deal. In addition, two of the bank's client advisors, Daniela Casadei and Fabio Frazzetto, pleaded guilty to felony tax charges. The pair had been fugitives since 2011 when they were originally charged.

November 2015

Barclays

The bank was fined £72.069 million ($108.664 million) for failing to conduct sufficient checks on ultra-high-net-worth clients, putting further pressure on firms to adopt best practice in ‘know-your-client’ checks. The UK-listed banking giant arranged a £1.88 billion transaction for these clients in 2011 and 2012 without performing proper levels of due diligence on them. The UK's Financial Conduct Authority said that the wealthy clients involved were “politically exposed persons,” i.e. highly risky politically, and therefore should have been subject to greater scrutiny.

Deutsche Bank

The German bank was ordered to pay a $258 million penalty for carrying out transactions on behalf of US-sanctioned countries, including Iran, Syria and Sudan. The banking giant set up payment processing schemes to evade US Treasury Office of Foreign Asset Control (OFAC) sanctions. Between at least 1999 and 2006, Deutsche Bank conducted more than 27,200 US dollar clearing transactions worth more than $10.86 billion on behalf of Iranian, Libyan, Syrian, Burmese, and Sudanese financial institutions and other entities subject to US economic sanctions. The bank was to pay $200 million to the NYDFS and $58 million to the Federal Reserve, and install an independent monitor for such violations. It also fired the six employees involved in the scheme who were still employed by the bank, and banned three additional employees from any duties involving the US operations.

Goldman Sachs

US authorities fined the firm $50 million after an employee of the Wall Street firm agreed to steal confidential regulatory and government information to use in advising a client. The New York Department of Financial Services said that Goldman Sachs accepted a “three-year voluntary abstention from accepting new consulting engagements that require the NYDFS to authorise disclosure of confidential information”.

October 2015

Crédit Agricole

Crédit Agricole Corporate and Investment Bank, a bank owned by the French group Crédit Agricole, agreed to pay a total of $787.3 million in criminal and civil penalties and enter a deferred prosecution agreement with US authorities for violating sanctions involving Sudan and other jurisdictions. The bank entered the agreement with the US Attorney’s Office of the District of Columbia for breaches of the International Emergency Economic Powers Act (IEEPA) and the Trading With the Enemy Act (TWEA). The bank also signed settlement agreements with the Treasury Department’s Office of Foreign Assets Control (OFAC), the Board of Governors of the Federal Reserve System, the New York County District Attorney’s Office and the New York State Department of Financial Services (DFS).

July 2015

FCA fines

The UK's Financial Conduct Authority levied fines of £1.23 billion ($1.92 billion) for market integrity breaches last year, according to new data from Kinetic Partners.

The regulator's recent enforcement actions relating to interbank rate manipulations include March's ban of Paul Robson from the UK financial services industry – the first public ban of a trader over Libor (the London Interbank Offered Rate) manipulations. Deutsche Bank was also ordered to fork out £227 million over its manipulation of Libor and Euribor inter-bank rates. This was a record FCA penalty for Ibor misconduct.

Foreign exchange manipulation fines, pleas and settlements

Six of the world’s biggest banks – Barclays, Citigroup, Royal Bank of Scotland, Bank of America, UBS and JP Morgan – were hit with heavy fines for breaking rules that pertained to the $5.3 trillion (daily turnover) global forex market, putting the need for compliance once again in the spotlight. In total, the penalties that the banks paid stand at $5.6 billion.

Barclays was hit with a with a fine totalling £1.534 billion ($2.38 billion) levied by regulators in the US and the UK for failing to control practices in its foreign exchange operations. UBS signed a resolution agreement with US authorities over its investigation of the alleged rigging of the foreign exchange markets, avoiding criminal prosecution and obtaining conditional immunity from prosecution. The bank admitted a charge of wire fraud and had to pay a $203 million fine in connection with Libor. It also agreed to pay a $342 million penalty relating to its forex business.

In the case of JP Morgan, it agreed to plead guilty to breaking US law and pay a fine of $550 million. The agreement was with the US Department of Justice and Federal Reserve. The Royal Bank of Scotland also reached settlements with the Federal Reserve and the DoJ over foreign exchange transgressions.

RBS agreed to enter a guilty plea pursuant to a plea agreement with the DoJ admitting that it knowingly, through one of its euro/US dollar currency traders, joined and participated in a conspiracy to eliminate competition in the purchase and sale of the euro/US dollar currency pair exchanged in the FX spot market in the US and elsewhere, in violation of the Sherman Antitrust Act. The charged conspiracy continued from as early as December 2007 to at least January 2013. RBS is charged with participating in the conspiracy from as early as December 2007 until at least April 2010. The plea agreement was subject to approval of the federal court in Connecticut that was presiding over the matter. RBS agreed to pay $395 million to the DoJ and $274 million to the Federal Reserve to resolve the investigations. RBS remained in discussions with governmental and regulatory authorities in other jurisdictions in relation to conduct within its FX business. In addition, RBS and RBS Securities have reached an agreement to settle the consolidated antitrust class action brought on behalf of plaintiffs who entered into FX transactions with RBS or other defendant banks. The agreement is subject to execution of a final settlement agreement and approval of the federal court in New York that is presiding over the matter.

Citigroup signed settlements with the US Department of Justice and the board of governors of the Federal Reserve System to resolve investigations into its foreign exchange business. The settlement with the DoJ included a guilty plea by Citicorp, a subsidiary of Citigroup, to a violation of the Sherman Antitrust Act and fine of $925 million. The settlement with the Fed included the entry of a cease and desist order and a civil money penalty of $342 million. Citi also reached a separate agreement to settle related private US class action claims for a payment of $394 million, subject to court approval.

Bank of America was fined $205 million. BoA avoided a guilty plea over the actions of its traders in chatrooms. Five out of the six banks (excluding Bank of America) pleaded guilty to felony charges.

November 2014

HSBC

HSBC’s Swiss-based private banking unit agreed to pay $12.5 million to settle charges with the Securities and Exchange Commission for failing to register before providing cross-border brokerage and investment advisory services to US clients. HSBC Private Bank amassed as many as 368 US client accounts and collected fees totalling approximately $5.7 million for cross-border advisory and brokerage services, which it began providing more than 10 years ago.

The UK’s financial regulator slapped fines totalling £1.115 billion ($1.7 billion) on five banks for lax controls on their G10 spot foreign exchange trading operations, while US and Swiss regulators have also punished banks, ending a probe into forex benchmark-rigging. The British regulator imposed the fines on the following banks: Citibank NA £225,575,000; HSBC, £216,363,000; JP Morgan, £222,166,000; Royal Bank of Scotland, £217,000,000, and UBS £233,814,000.

Separately, the Bank of England fired its chief currency dealer, Martin Mallett, making the saga one of the most serious financial scandals to have hit the City in years. US and Swiss regulators also investigating the issue in the world’s $5.3 trillion-a-day forex market took action. FINMA, the Swiss regulator, forced UBS to disgorge SFr134 million ($138 million); and, in the US, the Commodity Futures Trading Commission imposed a total financial penalty of more than $1.4 billion on the banks.

September 2014

Barclays

The bank was fined a record £37.7 million ($61.8 million) by the UK Financial Conduct Authority for failing to properly protect clients’ custody assets, in a setback for the bank after the Libor scandal in 2012. The FCA said that the bank’s investment arm had failed to protect clients’ assets worth £16.5 billion between November 2007 and January 2012.

August 2014

Bank of America

The bank agreed to pay a record fine of $16.65 billion over its failure to disclose the risk to customers of its mortgage-backed securities in the run up to the financial crisis in 2008. The US Justice Department said in a stateme that as part of the settlement the bank had agreed to pay $9.65 billion in cash and $7 billion in relief to struggling homeowners. The cash portion consists of a $5.02 billion civil monetary penalty and $4.63 billion in compensatory remediation payments. The fine is the largest civil settlement with a single entity in US history and relates primarily to conduct that occurred at Countrywide and Merrill Lynch before BoA acquired them before the financial crisis.

Standard Chartered

The bank reached a $300 million settlement with US authorities over defective anti-money laundering controls. It also faces tighter controls on certain clients in Hong Kong and United Arab Emirates. The UK-listed bank said it had reached a final settlement with the New York State Department of Financial Services regarding deficiencies in the anti-money laundering transaction surveillance system at its New York branch.

The bank had to suspend dollar clearing through its New York branch for high-risk retail business clients at its SCB Hong Kong subsidiary; exit high-risk client relationships within certain business lines at its branches in the United Arab Emirates, and refuse to accept new dollar-clearing clients or accounts throughout its operations without prior approval from the DFS.

PricewaterhouseCoopers

The firm was fined $25 million for improperly altering a report on anti-money laundering and sanctions compliance by Bank of Tokyo Mitsubishi. The New York State Department of Financial Services has also banned PwC from accepting consulting work at financial institutions regulated by the organisation for two years.

July 2014

Lloyds Banking Group

The bank was fined $370 million by British and US authorities for the manipulation of Libor and other benchmark failings. The fine includes $105 million by the Commodity Futures Trading Commission, approximately $178 million by the Financial Conduct Authority and $86 million from the US Justice Department. The manipulation of submissions covered by the settlements took place between May 2006 and 2009. Lloyds said that the individuals involved had either left the group, been suspended or are subject to disciplinary proceedings.

June 2014

BNP Paribas

France's largest bank was fined $8.97 billion and temporarily lost the ability to handle dollar-denominated business in the US (with clients using a third-party bank) during 2015. The bank pleaded guilty to violations of US sanctions against Sudan, Cuba and Iran. The issue has raised concerns that US authorities are treating such cases as ‘shakedown’ operations to fill government coffers (as argued by The Economist magazine). The fines have soured Franco-American relations.

May 2014

Credit Suisse

The bank pleaded guilty to conspiracy to help US citizens evade taxes and agreed to pay a $2.815 billion settlement with US authorities, a move that the Swiss bank said will not affect its licences or business and operational capabilities.

April 2014

Invesco Perpetual

The Financial Conduct Authority in the UK fined Invesco Perpetual £18.6 million ($31.3 million) for exposing investors to greater levels of risk than they had been led to expect. Between May 2008 and November 2012, Invesco Perpetual did not operate within the requisite investment limits. The FCA said that the bank broke the rules it had designed to limit risks to investors on 33 occasions in 15 funds, resulting in losses of £5 million.

Standard Chartered

The Monetary Authority of Singapore took "appropriate supervisory actions" against the bank after it found that bank statements of some private banking clients had been stolen. The issue pertained to a report by Standard Chartered in December 2013 that around 560 of its private banking clients' February bank statements had been stolen at its third-party service provider, Fuji Xerox Singapore. Fuji Xerox had been the designated printer of the bank's statements for private banking customers. The police alerted Standard Chartered of the theft.

January 2014

Standard Bank

The Financial Conduct Authority fined the British subsidiary of South Africa's Standard Bank Group £7.6 million ($12.6 million) for failings relating to its anti-money laundering policies and procedures to do with corporate customers connected to politically exposed persons. The FCA said that Standard Bank had failed to take reasonable care to ensure that all aspects of its anti-money laundering policies were applied appropriately and consistently to its corporate customers connected to PEPs between 15 December 2007 and 20 July 2011.

November 2013

Royal Bank of Scotland

The US Department of the Treasury’s Office of Foreign Assets Control announced a $33 million agreement – as part of a combined $100 million settlement – with the Royal Bank of Scotland to settle the UK-listed firm’s potential liability for breaking US sanctions regulations. The settlement resolved OFAC’s investigation of apparent violations by RBS of US sanctions programmes relating to Iran, Sudan, Burma and Cuba. Between 2005 and 2009, RBS engaged in payment practices that interfered with the implementation of US economic sanctions by financial institutions in the UK.

December 2013

Lloyds Banking Group

The Financial Conduct Authority fined this British bank a record £28 million ($45.8 million) for "serious failings" relating to its sales incentives, which resulted in a culture of mis-selling among advisors. The FCA said that this was the largest ever fine that it or its predecessor, the Financial Services Authority, had ever levied over retail conduct.

November 2013

SAC Capital

The $15 billion hedge fund run by Steve Cohen, one of the biggest names in the global hedge fund business, had to forfeit its investment advisory business and pay a total fine of $1.8 billion after pleading guilty to insider trading charges, the US Department of Justice said. The settlement brought a seven-year investigation by US prosecutors to an end and fuelled months of speculation as to whether Cohen might turn the remainder of his business into a family office structure.

October 2013

Rabobank

This Dutch bank agreed to pay more than $1 billion in criminal and civil penalties to settle investigations by British, American and other regulators of its part in manipulating global benchmark interest rates. Rabobank’s chief executive, Piet Moerland, left his post immediately after the announcement.

The settlement with Rabobank is the second largest agreement after the $1½ billion penalty imposed on UBS related to the manipulation of benchmark rates, which help determine the borrowing costs for trillions of dollars of mortgages, business loans, credit cards and other financial products. As part of the settlement, Rabobank avoided criminal charges as long as it continued to co-operate with investigators. The firm had to pay a $325 million criminal penalty to the US Justice Department, and fines of $475 million to the Commodity Futures Trading Commission, as well as $170 million to the UK’s Financial Conduct Authority and about $96 million to the Dutch authorities.

October 2013

HSBC

A unit of the bank was ordered to pay $2.46 billion after a US court ruled that one of the bank’s subsidiary companies, along with three of its senior executives, had made false statements that inflated the company’s share price. The ruling was against credit card and mortgage lender Household International, acquired by London-based HSBC in March 2003. Household – now known as HSBC Finance Corp – is believed to have made misleading statements that inflated the company’s share price. When contacted by this publication, HSBC stated that the matter had been noted in its filing for some time and that this was the next legal step in “an 11-year case.”

September 2013

JP Morgan

British and American regulators fined JP Morgan a total of $920 million for “serious failings” relating to trades carried out by the firm’s chief investment office. The bank agreed to settle actions brought by the US Securities and Exchange Commission, which imposed a financial penalty of $200 million and required the firm to admit wrongdoing; the Office of the Comptroller of the Currency, which imposed a financial penalty of $300 million, and the Federal Reserve, which imposed a financial penalty of $200 million. In addition, the Financial Conduct Authority fined the bank $220 million.