The “naughty corner” for miscreant banks and other wealth management institutions is getting crowded and also highlights why compliance is such a major spending and recruitment issue for firms these days. Charges of interbank rate fixing, lax anti-money laundering controls and questionable pricing policies have been levelled - and in some cases punished heavily.

HSBC

HSBC agreed to make a total payment of $1.92 billion to settle a US criminal investigation over breaches of anti-money laundering and sanctions laws, said to be the biggest penalty ever paid by a bank for such transgressions.

The UK/Hong Kong-listed HSBC created dramatic headlines earlier in the year when its global compliance boss, David Bagley, resigned in front of a US Senate Committee that was grilling HSBC executives and other persons about a report claiming widespread shortcomings in how HSBC operated anti-money laundering controls. It was said that money laundering failings facilitated monies for drug gangs, rogue states such as Iran, and terrorists.

Coutts

The UK-based private bank was fined £8.75 million (around $13.8 million) by the FSA, the sixth-largest fine ever handed out by the regulator, for failing to take reasonable care to establish and maintain effective anti-money laundering systems and controls relating to high-risk customers, including “politically exposed persons”.

Merrill Lynch

The Bank of America-owned firm was fined $2.8 million for supervisory failures that led to it overcharging clients $32 million in unwarranted fees. The US Financial Industry Regulatory Authority also imposed the fine on the US securities firm for failing to provide certain required trade notices. Merrill Lynch repaid the nearly 100,000 affected clients with interest.

UBS

The Irish Central Bank fined UBS' international life insurance division in relation to various breaches of a new act introduced to protect the financial system from money laundering and terrorist financing. The Central Bank of Ireland and UBS agreed on 19 June that the latter will pay a financial penalty of €65,000 (around $81,700) for failing to comply with specific requirements of the Criminal Justice Act 2010.

The life insurer, part of the Swiss wealth management and banking group, was not accused of terrorist financing or money laundering as such. Among the breaches were failing to instruct staff and directors about the new directives promptly after the Act had come into force in July 2010. The firm had also failed to adopt adequate written policies and procedures in relation to the identification and reporting of suspicious transactions, the central bank said in a statement. The central bank's anti-money laundering and counter terrorist financing supervisory unit identified these breaches during an inspection of the firm carried out in December 2010.

Standard Chartered

Standard Chartered agreed with authorities in New York to pay a civil penalty of $340 million to settle charges over transactions linked to Iran. "The New York State Department of Financial Services and Standard Chartered Bank have reached an agreement to settle the matters raised in the DFS Order dated 6 August 2012. The parties have agreed that the conduct at issue involved transactions of at least $250 billion,” according to a statement issued by Benjamin Lawsky, New York Superintendent of Financial Services.

In December 2012, the bank agreed a $327 million settlement with US authorities for rules violations relating to a period between 2001 and 2007.

“The settlements are the product of an extensive internal investigation that led the bank voluntarily to report its findings concerning past sanctions compliance to these US authorities, and nearly three years of intensive cooperation with regulators and prosecutors,” it said. “Under the terms of the OFAC Settlement Agreement, the Deferred Prosecution Agreements with the Department of Justice and the District Attorney’s Office, and the Cease & Desist Order and Order of Assessment of a Civil Money Penalty with the Federal Reserve, no further action will be taken against Standard Chartered by these authorities if it meets the conditions set out in the agreements,” it said.

Wells Fargo

The Securities and Exchange Commission has charged the firm's brokerage firm and a former vice president for selling products tied to mortgage-backed securities without fully understanding their complexity or disclosing the risks to investors. Wells Fargo agreed to pay $6.5 million to settle after the SEC found it relied excessively on rating agencies when selling products. The money will be placed into a fund for the benefit of harmed investors. The products were sold by Minneapolis-based Wells Fargo Brokerage Services (now Wells Fargo Securities), between January 2007 and August 2007.

BlackRock

The Financial Services Authority fined BlackRock Investment Management  (UK) £9.5 million ($15.3 million) for failing to protect client money adequately.

Nikolai Battoo

The US Securities and Exchange Commission froze the US-based assets of an asset manager and two of his companies for fraudulently proclaiming to investors a track record of “exceptional risk-adjusted returns”, when in fact “particularly heavy losses” were incurred in 2008. According to the SEC, Nikolai Battoo claimed to manage $1.5 billion on behalf of investors globally, $100 million of which was on behalf of US-based investors. The losses he suffered in 2008 were due to his investments in the Bernard Madoff Ponzi scheme - in which several Battoo-managed hedge funds were heavily invested - and a failed derivative investment programme.