Our AML Bank Fines 2020 Report found that banks were fined over $3,224,875, 355 billion and £2,615,333,831 throughout 2020.
2021 is shaping up to be another blockbuster year for AML-related fines. From January 1 to March 31 2021, 17 banks were fined over $1,250,521,695 and £910,192,215.
In this report, we share the total numbers, summaries of each fine, and actionable takeaways that compliance and AML professionals can learn from.
Summary: Malaysian Bank AmBank reached a $700 million dollar settlement with the government of Malaysia for its role in the 1MDB scandal that rocked Malaysian politics. The bank held former prime minister Najib Razak’s bank accounts including one which received a $681 million payment from the Saudi royal family. Razak was found guilty of money laundering and corruption over the transfer of millions of dollars linked to the 1MDB embezzlement scheme. The hefty fine is expected to have a material impact on AmBank’s earnings.
Key Takeaway: PEP transactions and suspicious activity reports should be reported to the local financial intelligence unit.
Summary: The US Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) fined credit card firm Capital One for willful and negligent violations of the Bank Secrecy Act. FinCEN found Capital One failed to file thousands of suspicious activity reports (SARS) and suspicious transactions. Millions of dollars in suspicious transactions went unreported for six years from 2008 to 2014 in a unit that served cash-checking businesses. Over 50,000 transactions totaling more than $16 billion were not reported.
Key Takeaway: Cash intensive businesses and suspicious transactions subject to payment thresholds must be reported to regulatory and law enforcement agencies to stop criminals abusing the financial system.
Summary: Deutsche Bank agreed to pay more than $130 million for violations of the Foreign Corrupt Practices Act (FCPA). An investigation by the US Securities and Exchange Commission (SEC) into a bribery and commodities fraud scheme found the German bank funneled more than a million dollars in outright bribes and millions more in consultants to bolster the bank's business around the world. The scheme included senior executive leaders, who knowingly and willfully conspired to falsify payments to corrupt consultants.
Key Takeaway: Banks must enforce an anti-bribery & corruption policy and have procedures to detect red flags and payments relating to `Gifts & Entertainment`. Senior executives must set a tone from the top to combat crime.
11 Banks in UAE
Summary: The United Arab Emirates central bank took enforcement action against 11 banks dishing out a combined total of $12.5 million in fines for AML failings. The Banks, which were not named, were found to have insufficient and inadequate money laundering and terrorist financing controls in 2019. UAE was criticized by the global financial crime watchdog FATF in the past for failing to act. The 11 fines are the first of its kind in the UAE. The central bank warned that it will continue to impose further financial sanctions in cases of non-compliance.
Key Takeaway: Regulated entities must ensure they have an adequate AML framework and the necessary controls in place to comply with an ever-changing regulatory landscape.
Apple Bank for Savings
Summary: Apple Bank for Savings settled a $12.5 million fine with the Federal Deposit Insurance Corporation (FDIC) for violating the Bank Secrecy Act. The regulator asked the bank to improve and enhance its AML compliance program, but Apple Bank for Savings failed to comply with that FDIC order in a timely manner. The violations occurred between April 2014 and September 2018.
Key Takeaway: Failings discovered during regulatory inspections must be addressed on time by allocating sufficient resources.
Summary: The French AML regulator, Autorité de contrôle prudentiel et de résolution (ACPR), fined ING following an inspection and shortcomings in the bank’s AML and counter-terrorist financing framework. The regulator found that ING did not have a good system to monitor and prevent money laundering and lacked complete and clear information about payers and payees of credit transfers that exceeded payment thresholds. Furthermore, the bank did not know some clients were Politically Exposed Persons (PEPs) presenting a heightened risk of bribery or corruption.
Key Takeaway: Banks must identify PEPs and adopt a risk-based approach and apply enhanced due diligence risk mitigation measures to manage PEP risk. Having effective AML & KYC systems and processes in place to monitor customers should be central to managing customer risk.
Fine: $2,650,000 each
Summary: Bahrain's criminal court sentenced five officials of Iran-owned Future Bank to five years in prison and fined $2.65 million each for committing money laundering offences. Future Bank is majority owned by Bank Saderat and Bank Melli – financial institutions subject to strict financial and economic sanctions. The executives were found to have deliberately concealed and stripped information from transactions when transferring funds over the SWIFT network to disguise the origin and beneficiary of funds.
Key Takeaway: Wire stripping and tampering with payment details is a criminal offence punishable by law.
Deutsche Bank and Discovery Life
Summary: The South African Reserve Bank (SARB) imposed penalties against Deutsche Bank and Discovery Life for weaknesses in complying with the Financial Intelligence Centre Act (FIC Act) - a legislation aimed at combating money laundering and terrorist financing. The central bank emphasized the bank was sanctioned due to a lack of governance and controls but not found to have facilitated transactions involving terrorist financing or money laundering. Discovery Life failed to fulfil cash threshold reporting requirements. Deutsche failed in customer due diligence and enhanced due diligence procedures.
Key Takeaway: Non-compliance in terms of KYC and CDD controls and governance often results in financial penalties. Aligning your governance and control framework to regulatory rulebooks can mitigate regulatory risk.
In addition to the fines listed above, two banks below have had investigations opened up for alleged violations of AML laws.
Fine: Facing charges
Summary: The Financial Conduct Authority (FCA) has started criminal proceedings against NatWest Group Plc. It is the first time the FCA is pursuing criminal action against a financial institution for breaching money laundering rules. Landmark money laundering charges were brought against the bank for failing to monitor company accounts receiving cash deposits totalling £365 over a 5-year period. NatWest failed to conduct proper due diligence and oversight in relation to Fowler Oldfield, a gold dealer and customer of the bank per se. The charges could lead to an unlimited fine. Shares fell by 3% as the announcement was made by the FCA. NatWest is part owned by the government.
Key Takeaway: Significant cash deposits are a red flag and suspicious transactions warrant extra due diligence.
Fine: Under investigation
Summary: ABN Amro is the subject of an ongoing money laundering investigation. Dutch prosecutors started an investigation in September 2019, but regulatory breaches were found to be broader and more complex than previously thought. The bank is now suspected of culpable money laundering, meaning ABN Amro was aware of money laundering but did not act turning a blind eye to criminal behaviour. This raises the possibility of a higher fine and senior executives being held personally accountable and liable for money laundering. ABN Amro shares fell 4% following the announcement. The investigation is expected to last longer than expected.
Key Takeaway: Wilfully ignoring money laundering or terrorist financing will have serious legal ramifications.