2020 AML penalties hit $2.2 billion - crackdown on financial crimes
What has happened?
Kroll’s annual Global Enforcement Review 2021, issued in December 2021, discloses that fines for AML failings by regulated institutions were five times higher in 2020 than in 2019, totalling $2.2 billion. Globally, 45 fines for AML failures were issued in 2020, the same number as in 2019.
This analysis comes in the same month that National Westminster Bank Plc was fined £264 million following convictions for three offences of failing to comply with UK money laundering regulations.
What are the details of the fines?
Despite the consistency in the volume of fines issued, the total value of AML enforcement as reported by Kroll has increased dramatically, reaching $2.2 billion at the end of 2020, five times higher than in 2019 and over two-thirds of the record levels recorded in 2018. Similarly, the total value of AML fines as of June 2021 is nearly half of the 2020 total, standing at $994 million.
The NatWest prosecution is the first time the FCA has pursued criminal charges for money laundering failings. The charges covered NatWest’s failure to properly monitor the activity of a commercial customer, Fowler Oldfield, a jewellery business based in Bradford, between November 2012 and June 2016. In the course of the customer relationship, approximately £365m was deposited with the bank, of which around £264m was in cash.
As identified by the FCA, some of the bank’s employees, who were responsible for handling these cash deposits, reported their suspicions to bank staff responsible for investigating suspected money laundering; however, no appropriate action was ever taken. The ‘red flags’ that were reported included significant amounts of Scottish banknotes deposited throughout England, deposits of notes carrying a prominent musty smell, and individuals acting suspiciously when depositing cash in NatWest branches. In addition, the bank’s automated transaction monitoring system incorrectly recognised some cash deposits as cheque deposits. As cheques carry a lower money laundering risk than cash, this was a significant gap in the bank’s monitoring of a large number of customers depositing cash, of which Fowler Oldfield was one.
How can we help you?
If you’d like to know more about how we can help you with your anti-money laundering arrangements, financial crime compliance or with any other regulatory compliance issues, our specialist financial crime team is here to help.
Contact us today on 0207 436 0630 or email info@thistleinitiatives.co.uk.