Regulators stepped up their enforcement actions during the third quarter of 2024, setting unprecedented records in the number and scale of sanctions, according to a report from a global regulatory intelligence firm. Corlytics.
Among these actions, the Commodity Futures Trading Commission’s (CFTC) $12.7 billion ruling against FTX and Alameda stands out as a pivotal moment for the cryptocurrency markets. The move marks a significant step toward increased accountability, two years after the collapse of FTX marked the start of a serious downturn in the cryptocurrency industry.
Corlytics’ review highlights a wide range of regulatory crackdowns, not limited to the crypto sector, but spanning various financial sectors. This period was marked by a notable increase in fines, as regulators launched pioneering enforcement measures that set new legal precedents.
Susie MacKenzie, head of legal and regulatory analysis at Corlytics, highlighted the aggressive regulatory stance. “We saw regulators take action during this third quarter, not only in terms of the amount of fines imposed, but also with some enforcement firsts. One action stands out both for its scale and its profile: two years ago, the collapse of FTX sent shockwaves through the crypto industry, raising fears of a prolonged “crypto winter.”
In August, the CFTC obtained a $12.7 billion judgment against FTX and Alameda. The CFTC identified fundamental failures, stating that “the basic regulatory tools, such as governance, customer protection, and oversight that exist to identify misconduct and ultimately prevent collapse, were not just not there. »
In the United States, a focus on recordkeeping failures, particularly the use of unauthorized communications channels like WhatsApp, remains a regulatory priority. The Securities and Exchange Commission (SEC) has highlighted the benefits of cooperation and self-reporting, suggesting these could mitigate sanctions. However, similar actions by UK regulators are underway as businesses are urged to adhere to strict record-keeping requirements amid rising non-compliance risks linked to remote working and mobile applications.
Consumer protection is also a major concern in the United States, as evidenced by the $20 million fine imposed on TD Bank by the Consumer Financial Protection Bureau (CFPB). The bank was also ordered to pay more than $7 million in restitution for disseminating inaccurate and negative customer information to credit reporting agencies.
In the United Kingdom, the Financial Conduct Authority (FCA) has imposed its first ever sanction against an audit firm. PwC has been fined for failing to report potential fraud at London Capital & Finance. Additionally, the FCA fined Starling Bank almost £30 million for its “shockingly lax” financial crime controls. This marks an important step in making financial institutions accountable for their internal guarantees.
The Australian Securities and Investments Commission (ASIC) also took significant action by fining Mercer Superannuation £11.3 million in its first greenwashing case, as part of a wider crackdown on misleading environmental claims.
Mackenzie concluded: “As we continue to monitor regulatory trends, it is clear that the SEC is intensifying its focus on executive conduct. This quarter, they emphasized the importance of self-reporting and cooperation, saying these actions can lead to significantly reduced sanctions. In light of ongoing enforcement actions, particularly regarding recordkeeping failures due to off-channel communications, businesses should remain vigilant. This changing environment highlights how important proactive compliance measures are.
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