Why financial services firms are facing increased anti-money laundering fines

There has been a significant rise in fines related to Anti-Money Laundering (AML) compliance over the last few years with firms like TD Bank, Binance & Nordea, among others, falling foul of the regulators in the last 18 months.

Heightened regulatory scrutiny

Regulatory bodies worldwide are intensifying their focus on AML compliance. This increased scrutiny involves more frequent and detailed inspections, which often uncover deficiencies in firms' AML programs. Regulators are determined to ensure that financial institutions adhere to stringent AML standards to prevent illicit activities.

Complex and evolving regulations

The regulatory landscape for AML is becoming increasingly complex. New rules and standards are regularly introduced, making it challenging for firms to stay compliant. This dynamic environment requires continuous updates to AML frameworks, and many firms struggle to keep pace, resulting in compliance gaps.

Technological challenges

As financial transactions become more digital and sophisticated, the need for advanced technology to detect and prevent money laundering grows. However, many financial services firms lag in adopting these technologies, leaving them vulnerable to money laundering activities. Effective AML compliance now requires robust technological solutions, which some firms have yet to implement fully.

High risk accounts

The Solicitors Regulation Authority’s (SRA) anti-money laundering (AML) report warns of the risks posed by common AML and financial sanctions issues. Firms often face penalties for failing to properly monitor and manage high-risk accounts. This includes inadequate customer due diligence and the failure to close or restrict accounts that pose a higher risk of money laundering. Regulators expect firms to have stringent controls in place to identify and mitigate risks associated with high-risk accounts.

Global coordination challenges

The lack of coordination among international regulatory bodies leads to inconsistencies in AML enforcement. Firms operating in multiple jurisdictions face the challenge of navigating different regulatory requirements, which can create confusion and compliance difficulties. This fragmented approach can result in firms inadvertently falling short of AML standards in certain regions.

How Marks Sattin can help you 

The surge in AML fines highlights the need for financial services firms to enhance their AML frameworks and stay updated with regulatory changes to ensure they are protected against the risk of money laundering. Additionally, the implementation of robust Onboarding / Monitoring / Screening applications will help in the efforts to avoid hefty fines. 

The Transformation team in financial services at Marks Sattin have decades of experience in supplying highly experienced consultants in both regulatory change and Risk / AML framework reviews and advising on/delivering the implementation of solutions such as Fenergo / Nice Actimize.  Please reach out to Daniel Jordan or Andrew Barnes to discuss how we can support you.