Fraudulent activity brought on by Covid-19 related initiatives may result in enforcement actions later in the year and into 2021, says Fenergo’s Rachel Woolley.
APAC regulators imposed almost USD 4 billion in fines for AML and KYC violations in the first half of this year, according to a new report from Fenergo.
Two of the highest value enforcement actions in 2020 thus far were issued in Malaysia, involving Goldman Sachs’s settlement over its role in the 1MDB scandal. The settlement included a USD 2.5 billion cash penalty and the guaranteed return of USD 1.4 billion in assets.
In some countries, fines increased substantially as a result of increased enforcement actions in response to recent FATF (Financial Action Taskforce) criticisms and concerns highlighted in mutual evaluation reports. These include Pakistan (up 845% compared to 2019 mid-year), Hong Kong (up 223%) and Taiwan (up 116%)
Globally, fines for AML, KYC and sanctions noncompliance totalled USD 5.6 billion.
Three Swedish banks were fined USD 536 million collectively for lacking sufficient AML governance and controls in the Baltic states. US authorities levied fines of over USD 900 million against Israel’s Bank Hapoalim bank for tax evasion and money laundering. In addition, a fine of USD 150 million was issued by the NYDFS to Deutsche Bank for its links to the late financier, Jeffrey Epstein.
According to Fenergo’s Global Director of Financial Crime, Rachel Woolley, there has been a 30% reduction in the value of fines issued to date, compared to the same analysis period last year. Still, it is likely that the total enforcement actions issued in 2020 will be on par with, if not surpass, the 2019 total of almost USD 8.4 billion.
“We can also expect to see additional penalties issued in response to the 1MDB scandal as the US Department of Justice (DoJ) investigation remains open,” Woolley said, adding that fraudulent activity brought on by Covid-19 related initiatives may result in enforcement actions later in the year and into 2021.