Top lawyers say 2021 will be record year for AML penalties

Rick Steves

Federal regulators have imposed more than $200 million in penalties on corporations, just in the last two months.

CFTC wants $660,000 fines to prove 3red Oystacher’s spoofing

Federal regulators have imposed more than $200 million in penalties on corporations, just in the last two months.

This fact together with the increased scrutiny of compliance with AML and Bank Secrecy Act Obligations, have led top lawyers at Katten Muchin Rosenman to conclude 2021 will be a record year for penalties.

Scott A. Resnik and Michael M. Rosensaft, partners at law firm Katten Muchin Rosenman, said now is a good time for companies to review their AML policies and determine if they provide adequate protection or if updating is in order.

“Companies should expect to see a continued focus on AML compliance in 2021 with regulators and law enforcement using the new tools they have been given through the AML Act, assessing increased monetary penalties, and making concerted efforts to monitor AML compliance of non-banking entities”, they wrote.

The Federal Deposit Insurance Corporation (FDIC) assessed a $12.5 million penalty against a company for unspecified AML violations, and the Financial Crimes Enforcement Network (FinCEN) penalized a company $390 million for failing to file suspicious-activity and currency-transaction reports, and for failing to implement and maintain an effective Anti-Money Laundering program.

“These large penalties are consistent with an enforcement trend that has seen financial regulators impose escalating fines and penalties on companies for AML violations. Total penalties for such violations exceeded $10 billion worldwide in 2020”, said Mr. Resnik and Mr. Rosensaft, who warned that the US Congress has turned its attention to AML compliance as well.

“The National Defense Authorization Act for fiscal year 2021, passed over a presidential veto, included the Anti-Money Laundering Act of 2020 (AML Act). The AML Act includes provisions for the creation of a federal database of beneficial owners; expanded coverage of the Bank Secrecy Act of 1970 (BSA) to include areas such as dealers in antiquities and virtual currencies; made available additional tools for law enforcement; heightened penalties for violations; and enhanced the AML whistleblower law”.

The Federal Reserve, FDIC, National Credit Union Administration, and Office of the Comptroller of the Currency have specified four pillars that make up an adequate BSA/AML compliance program:

1) a system of internal controls that assure ongoing compliance;

2) independent testing;

3) a designated individual or individuals responsible for monitoring BSA/AML compliance;

4) training for appropriate personnel.

The compliance program must include a Customer Identification Program with risk-based procedures.

Anti-Money Laundering fines is 2020 led by Goldman Sachs

The Malaysian unit of Goldman Sachs, which played a vital role in securing funds for 1MDB, was responsible for the largest AML fine in 2020, of $2.3 billion in the United States and $2.5$ billion in Malaysia. Senior management was complicit in bribery, money laundering, and flagrant misuse of funds by their clients.

Goldman also paid a further $1.4 billion from other 1MDB assets seized around the globe in a bid to avoid prosecution. The company had never pleaded guilty in any financial crime investigation in its 151-year history. In 2020, it finally did and paid the largest fine ever imposed in the United States.

Other high-profile AML fines in 2020 included $900 million to Westpac Bank (Australia) for miscellaneous AML violations and $150 million to SEB (Sweden) on account of the Nordic banks scandal.

 

Read this next

Digital Assets

10 crypto exchanges reportedly filed with Korean regulators

Only 10 cryptocurrency exchanges in South Korea have filed with the nation’s regulators to continue their businesses in the country. Out of this figure, the local industry media have identified the four biggest crypto exchanges – UPbit, Bithumb, Coinone and Korbit.

Industry News

With a New $36 Million Bounty, SEC’s Whistleblower Compensation Tops $1.1 Billion

The Securities and Exchange Commission on Friday said the total amount of payouts under its whistleblower program had topped $1.1 billion after the agency awarded $36 million to a tipster for flagging wrongdoing.

Retail FX

Bridget Messer Leaves IG Group after 16 Years

IG Group is parting ways with Bridget Messer, who held both CCO and executive director roles for the UK online trading specialist, according to a regulatory filing with Companies House.

Digital Assets

tZero Expands Cryptocurrency Offering With Five New Altcoins

Overstock.com’s blockchain subsidiary tZero today announced in a corporate statement that it added more popular cryptocurrencies/tokens to its proprietary platform. Effective October 4, tZero will support Bitcoin Cash (BCH), Stellar Lumen (XLM), Cardano (ADA), Compound (COMP), and Uniswap (UNI).

Digital Assets

China bans all crypto transactions ‘again’

The People’ Bank of China (PBOC), which is the central bank of China, has said that all crypto-related transactions in China are illegal and has once again reiterated its resolve to crack down on the crypto market.

Digital Assets

What has Ripple (XRP) been up to this week? A lot!

Ripple is far from stuck in the XRP lawsuit. The blockchain firm has announced partnerships in CBDCs and payments, its digital asset continues to be listed on high-profile exchanges, and the lawsuit is rippling through.

Industry News

SEC charges quant analyst for $8.5 million front-running scheme

The front-running scheme was allegedly concealed by executing the trades in the account of his wife, Maryna Arystava, who uses a different last name. This potentially allowed the fraud to last longer.

Industry News

Genesis appoints Billy Morris as CFO and opens Dublin office for low-code/no-code platform

Genesis helps firms to build software significantly faster than if they had started from scratch, with less code and at a lower cost, while simultaneously catering for a range of simple and complex financial use cases.

Industry News

Strike API Partners with Twitter to power instant payments with Bitcoin

Strike, one of the leading digital asset wallets built on the Bitcoin Lightning Network has announced the launch of its Strike API platform to serve various marketplaces and merchant businesses.

<