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The surge in anti-money laundering regulatory fines is not slowing down.

As reported in the Financial Times, regulators are continuing to increase pressure on the financial industry to strengthen their AML controls, especially in the UK and across the European Union.

A new report by governance and risk consultancy Kroll found that authorities levied almost $1bn ($994m) of AML fines in 17 big actions during the first six months of 2021. If the current trend is confirmed, 2021 will match the surge to $2.2bn we witnessed in 2020, which represents a 5X increase from the $444m total of 2019.

Interestingly, compared to 2018 when American authorities accounted for the majority of enforcement actions, Europe has now overtaken the US and Asia. Specifically, more than half of the fines levied in 2021 have come in the Netherlands alone.

Compared to previous years, recent changes in regulations now make it possible for regulators to levy harsher fines and even initiate criminal proceedings in case of repeated warnings. The report mentions NatWest, Monzo, N26, ABN Amro, ING and Capital One as some of the financial institutions either under investigation or fined by regulators in the first half of 2021.

The study, which has been running since 2016, highlights how once again regulators are punishing FIs for their shortcomings in AML management, inadequate suspicious activity monitoring and customer due diligence.

Kroll predicts that new laws will “lead to greater levels of enforcement action in the future” and “we can expect to see large fines and criminal enforcement continue through 2021 and beyond.”

In this context, having effective, comprehensive and sustainable AML controls in place is an absolute priority for financial institutions in Europe and around the world.

By embracing cutting-edge technology, compliance teams can systematically improve the accuracy and reliability of their AML controls at every step of the client due diligence and on-going monitoring journey. In fact, when properly implemented, RegTech solutions empower FIs to protect their business against regulatory and reputational risk.

At Know Your Customer, we specialise in next-generation client onboarding and AML monitoring solutions for the financial sector. We utilise a unique combination of national language processing, optical character recognition, artificial intelligence, API integrations and automation to streamlines and centralises all key client due diligence activities for financial institutions.

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Last updated on March 19th, 2024 at 06:25 pm

Claus Christensen

Claus Christensen is the CEO & Co-Founder of Know Your Customer. His vast array of previous experiences includes founding a technology company that develops email server infrastructure products for 60,000+ global customers and serving as VP Electronics at Thielert Aircraft Engines. A regular contributor to leading industry publications and a recognised expert in the anti-money laundering and financial regulation space, Claus is also the host of the RegTalks podcast and a senior lecturer of the Centre for Finance, Technology and Entrepreneurship (CFTE)’s RegTech Course.