Who were the latest institutions to be fined for AML non compliance and how much?
We don't often hear the outcomes, but most country's regulators are focused on working directly with their constituents to ensure ongoing compliance with AML laws. Court action or sanctions are usually used as a last resort, but when they are, the penalties can be substantial. Many of the companies we talk to about compliance services don't realise the extent or size of potential penalties, but reading some of the cases can be a great way of gleaning an understanding of how the regulators work, and the complexities of the issues they deal with in and around anti-money laundering.
Following are some of the more recent cases, selected either because of the size of the penalties, or the complexities of the cases.
£102 Million, Standard Chartered Bank, by the UK FCA
The UK Financial Conduct Authority has fined Standard Chartered Bank for failing to establish and maintain risk-sensitive policies and procedures, and failing to ensure its UAE branches applied UK equivalent AML and counter-terrorist financing controls, according to an article on the FCA website. (Read the full article)
£1.6 Million, Platinum Gaming Ltd and Gamesys £1.2 Million by the UKGC.
The UK Gambling Commission launched an investigation following reports that farudsters had spent hundreds of thousands of pounds in both organisations. In a statement, Richard Watson, Gambling Commission Executive Director, said: “There were weaknesses in Platinum Gaming’s systems and as a consequence, more than half a million pounds of stolen money flowed through the business. This is not acceptable and I would urge all operators to carefully read this case and learn lessons so they don’t make the same mistakes.” As part of a settlement with the Commission, Gamesys will return £460,472 of stolen money to victims and pay £690,000 as a payment in lieu of a financial penalty. This money will be spent accelerating delivery of the National Strategy to Reduce Gambling Harms. (Read the full article)
$10 Million, Morgan Stanley By FINRA.
The US Financial Industry Regulator has fined Morgan Stanley $10 Million for AML Program and Supervisory Failures. In a statement FINRA said there were three areas of concern, and explained: “As we stated in our Report on FINRA Examination Findings released earlier this month, FINRA continues to find problems with the adequacy of some firms’ overall AML programs, including allocation of AML monitoring responsibilities, data integrity in AML automated surveillance systems, and firm resources for AML programs,” said Susan Schroeder, FINRA Executive Vice President, Department of Enforcement. “Firms must ensure that their AML programs are reasonably designed to detect and cause the reporting of potentially suspicious activity.” (Read the full article)
$900 Million, ING by the Dutch DPPS
This was an itntersting case in that there was a PEP invoolved in some aspects, although it is not completely clear to what extent. The investigation was launched following allegations of wrongdoing at four companies that had accounts at ING, including US$55 million in bribes paid to the daughter of Uzbekistan’s president by a unit of Russian mobile operator VimpelCom. According to the Public Prosecution Service, ING Netherlands violated the Money Laundering and Terrorist Financing Act, a law that aims to prevent financial crimes. Under this Act, gatekeepers must, among other things, conduct customer due diligence and report unusual transactions to the Netherlands’ Financial Intelligence Unit (FIU).(Read the full article on ING's website)
The Australian regulator has also been busy, with several record penalties of late.
$700 Million, Commonwealth Bank of Australia, by AUSTRAC
AUSTRAC announced that an agreement has been reached between AUSTRAC and the Commonwealth Bank of Australia (CBA) for a $700 million penalty to resolve Federal Court proceedings relating to serious breaches of anti-money laundering and counter-terrorism financing (AML/CTF) laws. AUSTRAC’s enforcement action against CBA followed exhaustive investigations into CBA’s AML/CTF compliance and risk management practices, particularly in relation to its Intelligent Deposit Machines (IDMs). These investigations, undertaken in partnership with the Australian Federal Police, NSW Police Force and Western Australia Police, identified that CBA’s IDMs were being used to launder the illicit proceeds of crime. (Read the full article here)
$45 Million, TabCorp, by AUSTRAC
Tabcorp, an integrated gambling and entertainment company in Australia, was fined $45 million (US$ 31 million) by AUSTRAC, the Australian AML regulator. AUSTRAC CEO Paul Jevtovic said that the record $45 million civil penalty serves as a stark reminder to all reporting entities that there are serious consequences for non-compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). The matter was heard in the high court of Australia, where AUSTRAC alleged that Tabcorp had contravened the AML/CTF Act on 108 occasions over a period of more than five years. (Read the full article)
These are just a sample of some of the more interesting cases from the last year or so.
What is clear though, is that the financial regulators globally are taking penalties and sanctions more serioulsy as a method of enforcing legislation that supports their anti-orgnaised crime initiatives. So, if you get asked for additional identification about your company structure, proof of source of funds, or other infomation pertaining to your business and its true benficial owners, it might be worth pausing for a moment before you think that there is no reason behind the request. You'll be gald you did.