Fenergo, the Irish financial IT firm, has released data about the fines that regulators have issued around the world in the last ten years. A staggering US$26 billion (€22⅔ billion) in fines has been paid for non-compliance with anti-money-laundering (AML) rules (including know-your-customer or KYC rules) and sanctions alone.

The research - which seems to concentrate exclusively on AML/KYC/sanction fines - makes the following observations.

• American fines are more common and higher than those of other countries, just as they were ten years ago. The US accounts for nearly 44% of all regulatory AML/KYC fines in the world over the last decade and a staggering 91% of the total value ($23.52 billion).
• Regulators in the European Union have imposed 83 fines, totalling $1.7 billion, most of them coming from the UK's Financial Conduct Authority (FCA).
• Asia Pacific regulators have levied 79 fines worth almost $609 million, commencing in 2011.
• The Middle East still lags behind other regions for financial penalties, recording a total of  $9.5 million in the last 10 years.
• The US Department of Justice is the most punitive agency in the world when it comes to imposing financial penalties for non-compliance, levying half of the total amount - nearly $14 billion - followed by the New York Department of Financial Services at $3.6 billion.
• US regulators have hit foreign banks hard, imposing fines on European banks that amount to nearly five times the money that other regulators have levied on US banks. This, although Fenergo does not say so, it all of a piece with the traditional US approach to diplomacy, with its long-established policy of trying to turn every international interacction to the advantage of US corporations.
• Globally, 2015 was the most punitive year for fines, with regulator forcing banks to pay $11.52 billion.
• $8.9 billion was the highest single fine ever levied against a bank by one regulator.
• Fines for breaking sanctions account for 56% of the total amount extracted globally. This differs from APAC and Europe where AML-related fines far outweigh fines for sanctions violations.
• Scandinavia is the only region that fines its own banks more than international banks.

The figures show that regulators in the Asia Pacific zone and the Middle Eastern markets are, by degrees, becoming more proactive in their efforts to enforce their rules.

The rôle of the UK

One of the main weapons in the compliance officer's armory in future will be his access to registers of beneficial ownership. The United Kingdom has led the way here and, despite the shortcomings of its PSC or "persons of significant control" regime, which obliges companies to list such persons as they register, it is leading the way still. Rachel Woolley of Fenergo recently told Compliance Matters: "There's an open consultation now in which HM Govt has published a draft bill for comment in relation to overseas entities owning land in the UK - a major conduit for money laundering. Companies House is not, at the moment, able to force companies to declare real people as beneficial owners. In relation to the current draft, however, there will be the notion of a controlling individual. That's not in the PSC regime right now, even though 'C' stands for control.' Fenergo did a study of 80 countries to do with FATF recommendations 24 and 25 [which looked at laws] about registers to be maintained. 24 countries have national registers. 15 are implementing, i.e. they have started the process. At the anti-corruption summit in 2016, there were a further 8. We have yet to ascertain whether they have done anything. I believe that Germany has a register, but that it's not public."

She voiced concerns on the subject of Brexit, however: "We don't know whether the UK will be allowed to keep on participating in the EU's AML information flows. This is relevant to data transfers and data sharing."

European money laundering

Meanwhile, an AML software firm called FortyTwo Data has published some figures that reveal that the majority of big European banks have, by now, been fined for money laundering offences. Its latest research has found that 18 of the 20 biggest banks in Europe have been sanctioned for money laundering offences within the last decade, including the entire 'top ten' which consists of HSBC, Barclays and Lloyds from the UK, the French quartet of BNP Paribas, Crédit Agricole Group, Société Générale and Groupe BPCE, Germany’s Deutsche Bank, Santander of Spain and Dutch bank ING. The five biggest banks in the UK (HSBC, Barclays, Lloyds, RBS and Standard Chartered), which all count among the 20 largest in Europe, have been fined for money laundering offences also.

Earlier this year, Donald Toon of the National Crime Agency admitted at a Treasury meeting that money laundering in the UK was “a very big problem” and estimated that the amount of money laundered in the UK each year had now risen to a staggering £150 billion. Banks and financial services companies have faced an uphill struggle to move their operations onto the most advanced AML platforms recently. These products often cost tens of millions of pounds and possibly hundreds of millions if one takes the costs of integration, operation and maintenance into account.