Global fines for law violations reached a staggering $5.65 billion in the third quarter of 2023, according to a report published by Corlytics.
This figure represents a significant increase from the $1.5 billion and $2.27 billion recorded in the first and second quarters, respectively.
The majority of these fines, over 85%, were imposed by US regulators, with the aggregate total for 2023 reaching $5.65 billion. Notably, DWS Investment Management Americas, a subsidiary of Deutsche Bank, was fined $25 million by the US Securities and Exchange Commission (SEC) for failing to implement an effective anti-money laundering (AML) program and making misleading environmental, social and governance (ESG) statements.
In a landmark case, UBS Group has agreed to a $1.44 billion settlement with the U.S. Department of Justice (DoJ) and the Federal Reserve (Fed) over allegations of misconduct related to residential mortgage-backed securities issued before the 2008 financial crisis. The settlement concludes investigations by the Justice Department’s RMBS Task Force.
The SEC has been closely monitoring the use of off-channel communications, such as WhatsApp, among regulated entities, leading to sanctions and pressure for firms to review their electronic communications policies. Additionally, the UK Prudential Regulation Authority (PRA) fined Credit Suisse a record £87 million for risk management failures, part of a global enforcement action that resulted in combined penalties of $387.5 million in the UK and US.
Susie MacKenzie, head of legal and regulatory analysis at Corlytics, highlighted the importance regulators are placing on counterparty risk management. She highlighted recent communications from the Bank of England on the issue and significant GDPR fines in Europe, citing the €345 million fine imposed on TikTok by the Irish Data Protection Commission (DPC) for mishandling children’s data.
Data protection remains a major concern, with the DPC imposing a landmark €1.2 billion fine on Meta in Q2 2023. This has led to increased demand for stronger data protection measures, with regulators in Europe and the US responding accordingly.
The crackdown has mainly targeted financial crime and corporate governance, with fines for fraud, money laundering and terrorist financing on the rise. The UK’s Financial Conduct Authority (FCA) has fined a broker subsidiary of Archer Daniels Midland nearly £6.5 million for breaches of anti-money laundering legislation.
In addition, conduct, ethics, and consumer protection are increasingly under scrutiny. The U.S. Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) have fined Bank of America $140 million and $60 million, respectively, for conduct violations.
Evgeny Likhoded, President of Corlytics, highlighted the challenges of building effective compliance programs due to regulatory complexity. He stressed the importance of technology in strengthening regulatory compliance and fostering an embedded compliance culture within organizations.
Find the full report here.
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