In recent years, Anti-Money Laundering (AML) has become increasingly vigilant among governments and financial institutions. This has resulted in some of the biggest AML fines ever seen, as non-compliance with AML regulations can result in hefty penalties. In this blog, we’ll explore AML fines in depth, what they mean, and some of the most considerable AML fines to date.
An Anti-Money Laundering fine or AML Fine is a financial penalty issued to an individual or company that fails to comply with AML regulations. It’s important to note that the size of the fines can vary greatly, as the severity and extent of non-compliance determine them.
AML fines are imposed to deter and punish those who don’t comply with the AML regulations. It also acts as a deterrent for other financial institutions so that they take their AML obligations more seriously. Fines can be issued for various reasons, such as failing to carry out customer due diligence or needing adequate systems and controls to monitor customer activity.
An AML fine is given out by the FCA (Financial Conduct Authority). They will assess the case and use certain factors to determine what kind of financial penalties should be issued. These include:
Once all of these factors have been considered, the FCA will decide on an appropriate AML fine.
Let’s take a look at some of the most significant fines to be issued this year:
A U.S. court has approved a $2.7 billion fine against Binance, the cryptocurrency exchange, and its former CEO, Changpeng Zhao, following a case brought by the U.S. Commodity Futures Trading Commission (CFTC). The court mandated a $150 million payment by Zhao and a $2.7 billion payment by Binance.
The penalties are a result of Binance’s violations of anti-money laundering and sanctions laws, failure to report suspicious transactions, and associations with entities linked to terrorism and child exploitation. Zhao stepped down in November, pleading guilty to breaking U.S. anti-money laundering laws, as part of a settlement closing a lengthy probe into the world’s largest crypto exchange.
The Australian Transaction Reports and Analysis Centre (AUSTRAC) has fined Crown Resorts $450 million for past violations of Australian anti-money laundering legislation at its casinos in Perth and Melbourne. The financial intelligence agency acknowledged that it had underrated the threats that its casinos posed for money laundering and terrorism financing.
William Hill and its sister brand, Mr. Green, have been fined a record-high $19.2 million for failing to take care of the community and stop money laundering.
One of the worst mistakes was letting a customer open an account and spend £23,000 in 20 minutes without checking anything. Other users were able to spend £18,000 in 24 hours and £32,500 in two days, again without showing proof of income or going through AML checks.
Customers were allowed to put in large amounts of money, which they then lost, without proper checks to prevent money laundering.
Even though the Gambling Commission told companies not to take advantage of weak people during a shutdown, many of the worst cases happened during this time.
Guaranty Trust Bank UK Ltd was fined £7.6 million for having major problems with its AML processes and controls. Due diligence on high-risk clients was not performed, nor was the origin of the client’s wealth or assets investigated.
Since it was not the bank’s first time doing something wrong, the fine was made a lot bigger. But the bank hasn’t argued with the FCA’s results and has agreed to settle. This has allowed them to get a 30% discount.
A $50 million fine has been put on the Bank of Queensland (BOQ). Regulators said that BOQ had broken financial standards and not followed anti-money laundering laws.
Based on what has happened with other banks that have broken rules, the BOQ’s costs could go up as it is forced to fix its systems.
BOQ must retain $50m until it implements a corrective action plan to satisfy financial authorities AUSTRAC and APRA’s concerns, according to a separate commitment.
The FCA fined the largest Islamic bank in the United Kingdom £4 million for neglecting to conduct adequate checks on the fortunes of high-risk customers. Al Rayan Bank did not maintain up-to-date due diligence records or have adequate procedures for handling significant cash deposits.
In addition to this, there was an insufficient amount of AML training. Despite being warned of deficiencies by the Second Line of Defense, problems were not resolved.
An online gambling operator was hit with a £6.1 million punishment by the UK Gambling Commission (UKGC) for failing to adequately address social responsibility and money laundering concerns.
Although unusual play patterns and prolonged play times were reported, In Touch Games, which runs 11 online gaming platforms in the UK, did not engage with a client for seven weeks. A customer’s assertion of a monthly income of £6,000 was likewise approved without verification, despite warning signs.
It settled for £2.2m in 2019 and paid a £3.4m punishment the following year. Repeat offenders will face increasing penalties, the Gambling Commission has warned.
The penalty for not reporting money laundering is severe and can result in huge fines or jail time. If you are found to be complicit in a money laundering offense, then you could face prosecution under the Proceeds of Crime Act 2002.
Spotting AML red flags is essential for financial institutions to spot money laundering activity. Red flags are warning signs that suggest something may need to be corrected, such as large and frequent cash or wire transfers without a valid business purpose or an unusually high volume of transactions from customers with no history of previous activity.
Other red flags of AML include customers who could be more active when asked questions about their transactions and customers with complex structures for ownership or control. It’s important to note that red flags don’t necessarily mean money laundering is occurring, but they warrant further investigation by a money laundering reporting officer.
Currently, the countries with the most severe AML fines are:
Money laundering is a serious crime that poses a significant threat to financial systems worldwide. Governments and regulatory bodies have implemented Anti-Money Laundering (AML) laws and regulations to combat this threat, and authorities are cracking down on those who violate them. In recent years, several countries have been fined heavily for failing to implement adequate AML measures, resulting in billions of dollars in penalties.
To put it simply, businesses can avoid any kind of fines by adhering to the rules and regulations of AML Compliance. Here are some bits of advice:
Note that verification processes may be time-consuming and complex. That is why working with verification solution providers that can develop unique processes that maintain conversion high and compliance impermeable is more beneficial.
We hope that this blog has helped provide information on AML, its penalties, and the processes involved in preventing money laundering. Remember that it is essential for financial institutions to have robust systems and controls in place to detect any suspicious activities.
Compliance with AML regulations is necessary and very important to ensure a safe and secure financial system. If you require any further information or advice, please do not hesitate to contact us at KYC. We are here to help!
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