Financial institutions

sanctions for global financial institutions halved in 2021

Friday 07 January 2022 06:00

UBS has been fined $2 billion by a Paris court, the biggest penalty imposed on a global financial institution in 2021 (Photo by Cate Gillon/Getty Images)

The value of sanctions imposed on global financial institutions fell 49% in 2021 as pandemic-related restrictions thwarted investigations.

Global financial institutions were hit with $5.4 billion in enforcement actions for money laundering and data privacy breaches in 2021, up from $10.6 billion in 2020 according to company analysis of Fenergo compliance. The total number of fines issued fell from around 760 to 176, with Fenergo researchers attributing the drop in regulatory activity to disruptions caused by the Covid-19 pandemic and a lack of adequate technology to stop criminal activity. .

“The pandemic has impacted regulatory investigations,” said Rachel Woolley, global director of financial crime at Fenergo. “Regulators haven’t been able to initiate as many on-site investigations in the past two years, which likely had a ripple effect on enforcement action.”

“With criminals using more sophisticated methods to conceal illicit gains such as cryptocurrencies and other virtual assets, time is running out for financial institutions to adopt technology that provides a holistic view of customers and the risk they potentially present, as well as the identification of activity and behavior that could indicate criminal activity,” she added.

Despite the overall decline in the value of fines issued around the world, exceptional payments were still being demanded from a handful of banks. Swiss bank UBS has been fined $2 billion by a Paris court, the largest of the year, for helping wealthy French clients avoid paying taxes.

In the UK, regulators bucked the macroeconomic trend with a near increase in the amount of fines issued in 2021 compared to the previous year.

The UK issued enforcement orders worth $688 million in 2021, up from $231 million in 2020. More than half of the total was increased by a $350 million fine imposed on Natwest in December by the FCA, which fined HSBC $85 million weeks later.

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