Reported by Fenergo

Fenergo, the leading provider of digital solutions for Know Your Customer (KYC), Transaction Monitoring and Client Lifecycle Management, released today its annual financial institution fines analysis, shedding light on fines imposed on in the United States. The study analyzed penalties imposed by US regulators from January to December 2023, discovering a 69% year-over-year (YoY) spike in financial institution penalties, of which 99% of total fines imposed were associated with Anti-Money Laundering (AML) / Countering the Financing of Terrorism (CFT). It also revealed that digital asset and payment organizations contribute 90% to the total US fines—among other findings.

AML/CFT Penalties Take Center Stage, Leading 99% of Total Fines

In the fiscal landscape of 2023, AML/CFT fines emerged as the predominant force capitalizing on 99% of fines levied to financial institutions. This overarching category encompasses fines related to Customer Due Diligence (CDD), Know Your Customer (KYC), Sanction violations, Suspicious Activity Reports (SARs), and Transaction Monitoring.

Commenting on the data, Tracy Moore, Director of Strategy at Fenergo, said: “Our findings show the need for financial institutions to reassess and strengthen their commitment to AML/CFT practices in the US. This figure sends a clear message that the US is on a mission to combat money laundering and the financing of terrorism and regulators are charting the course. Financial institutions need to acknowledge the urgency and to take action to meet rising regulatory demands by implementing robust risk-based programs that start with customer onboarding, and progress through real-time monitoring, accurate reporting and compliance measures.”

Digital Assets Command 90% of US Penalties

Fines associated with digital asset organizations reached a staggering $4,546,267,523, representing a commanding 90% of the total fines imposed in the US.

“Digital asset organizations stand at a crucial crossroads. Commanding 90% of the total fines should highlight an urgent call for transformative change. Our findings mandate a clear need for the redefinition of the approach to compliance within this industry,” concluded Moore.

On the overall report, Moore commented: “Our findings underscore the heightened regulatory pressures across sectors and industries and showcase the need to proactively address and enhance adherence to regulatory standards. However, given the limited financial crime resources that financial institutions are working with, it’s evident that they must look for outside-the-box solutions. As 2024 unfolds, it’s prudent to consider leveraging cutting-edge technologies like machine learning and artificial intelligence to bridge the growing space, reducing the risk of future enforcement actions and fostering a more robust and compliant financial landscape.”

Read full release: https://www.tradersmagazine.com/xtra/penalties-levied-by-us-regulators-on-financial-firms-rose-69-in-2023/