Have you ever thought why the international regulatory bodies strictly stressed the implementation of AML regulations? They are the measures that are very powerful in mitigating money laundering and other financial crimes.
The interesting fact about this regulation for financial institutions is that they are not the choice businesses are obliged to incorporate these rules into their internal compliance program.
But what if businesses do not comply with these regulations? Are there any regulatory consequences for them? There are various real-time examples set by the international bodies by imposing billions of dollars of fines on multiple financial institutions.
Today, we will discuss the top 5 fines imposed by the Regulatory bodies for violating the AML regulation. Why are these AML fines imposed and what lessons should financial institutions learn from this massive compliance failure?
Top Institutions That Paid Billions in AML Fines
1. Danske Bank – $2 Billion
Among all the AML fines, the Danske bank failure and consequently paying 2 billion dollars in fines is on top of the list. Because this bank was the center point of money laundering and other financial crimes in its Estonian branch.
For years Banks were being exploited by criminals to send over 20 billion dollars in transactions to the people of Russia and Soviet states as well.
Why the Fine Was Imposed? Any bank could be exploited by criminals, but the thing that matters the most is the bank’s intention toward mitigating money laundering crimes.
This was the main reason Danske Banks imposed fines because the banks failed to implement adequate AML regulations and due diligence processes.
Due to the compliance failure, the banks had to face reputational damage as well as almost 2 billion dollars in fines.
2. Goldman Sachs – $3.9 Billion
The Malaysian state investment fund was involved in this scandal by embezzling billions of dollars in embezzlement.
And then this fund was tried to disclose as legitimate money and for that they made the misappropriated translation and Goldman Sachs was the main player in doing these money laundering activities.
To hide the origin of stolen money, they buy luxury assets such as real estate, and art and even they invest in Hollywood movies.
When the investigative agency found the involvement of Goldman Sachs in the case, Goldman Sachs was fined 3.9 billion dollars. Because the bank did not implement the proper AML regulation within the compliance system that could be beneficial in detecting these transactions.
This scandal not only posed damage to the bank but also had wide-reaching effects on Malaysia’s economy and its global financial reputation.
3. HSBC – $1.9 Billion
HSBC is the most renowned scandal in money laundering crimes. Where the bank had to pay 1.9 billion dollars in fines for their noncompliance with the AML regulations.
In the first decade of the 2000s, HSBC’s lax control allowed Mexican drug cartels to launder and move billions of dollars to other jurisdictions. This happened due to the weal AML compliance in place.
The bank also failed to detect suspicious transactions in the U.S. and other countries, which allowed dangerous criminals to move money without any oversight.
This was one of the major AML fines that also was a wake-up call for global banks to highlight the importance of the AML framework.
4. Deutsche Bank – $630 Million
How would you react if you knew that bank clients had successfully moved 10 billion dollars out of the country without being detected? It’s alarming and rais the authenticity of the bank’s ability to mitigate money laundering and other financial crimes.
Through a series of stock trades, clients would buy securities in rubles in Moscow and simultaneously sell equivalent amounts of the same stock for foreign currency in London. This technique was used to launder large sums of money.
The regulatory bodies found that the bank was failing to comply with many AML regulations, particularly in the London and Moscow branches.
The major reason of imporing the fines on banks was that The had also bank failed to identify suspicious trades and monitor high-risk clients properly.
5. JPMorgan Chase – $920 Million
When your bank is even able to differentiate between legitimate and illegitimate transactions, the chances of penalties increase. JPMorgan is one such example of these AML fines who had to pay 920 billion dollars due to inadequate controls over suspicious transactions.
It was revealed that billions of dollars flowed through the bank without proper due diligence, and without implementing the EDD measure on the high-risk individuals.
This exposed the bank to money laundering risks that could have been avoided with stronger compliance mechanisms.
The fine was the result of the bank’s failure to implement a robust AML framework, despite warnings and previous violations. Regulators found that JPMorgan lacked sufficient internal controls to detect and report suspicious activities.
Your bank could be the next on the list of AML fines if you rely on the old and conventional method of monitoring and screening suspicious transactions. AML Watcher offers you advanced AML solutions that come with zero false positive rates.