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.