AML penalties have already made headlines this year. We unpack 2024's largest fines thus far and explain how these could have been avoided.
Anti-money laundering (AML) failures have been widespread, with firms failing to meet their AML obligations. This year has seen a few record AML fines issued. The highest of these is to TD Bank for failure to properly monitor money laundering by drug cartels. This is one of two AML penalities received by the bank in 2024.
AML fines and settlements, in general, have been well into the millions, indicating the severity of these failings.
The causes of these penalties are varied, including a lack of due diligence and failure to fulfil AML responsibilities. In each case, the offenders fail to show regulators that they took reasonable steps to prevent money laundering, which results in a financial penalty.
We track these fines on an ongoing basis; find out more in our posts about the biggest AML fines of 2020, the biggest AML fines of 2021, in 2022 and the latest penalties in 2023.
TD Bank has agreed to pay $3 billion to settle charges that it failed to properly monitor money laundering activities, primarily linked to drug cartels.
This settlement includes a $1.3 billion penalty paid to the US Treasury Department’s Financial Crimes Enforcement Network, the largest such fine ever for a bank. Additionally, TD Bank will pay $1.8 billion to the US Justice Department and plead guilty to violating the Bank Secrecy Act.
The US Department of Justice criticised TD Bank for having "long-term, pervasive, and systemic deficiencies" in its transaction monitoring systems. Attorney General Merrick Garland emphasised that by failing to act, TD Bank essentially became complicit in criminal activities.
Between January 2018 and April 2024, more than 90% of transactions were left unchecked, allowing over $670 million to be laundered through TD Bank accounts, facilitating criminal activities.
“I want to be clear, these systemic failures did not just create hypothetical vulnerabilities, but they resulted in actual, material harm to American citizens and communities. Time and again, unlike its peers, TD Bank prioritised growth and profit over complying with the law. The bank enabled drug trafficking.”
- Wally Adeyemo, Deputy Treasury Secretary
Nordea Bank pay $35 million to settle a probe into compliance failures related to the 2016 Panama Papers leak, as announced by New York’s Department of Financial Services (NYDFS).
The investigation found that Nordea had inadequate anti-money laundering (AML) controls and failed to properly vet its customers and partners. These lapses allowed high-risk transactions, linked to illicit funds from Russia and Azerbaijan, totaling billions of dollars between 2008 and 2019.
The NYDFS highlighted that Nordea's weak AML systems and decentralised compliance structure exposed the bank’s financial channels to criminal activities, posing a risk to the New York financial system.
"International financial entities such as Nordea must safeguard against criminal activity in the global financial system, and for years Nordea failed in these respects."
- Adrienne Harris, NYDFS
The FCA has fined Starling Bank £28.96 million for failing to properly screen for financial sanctions and repeatedly breaching an agreement not to open accounts for high-risk customers. Despite rapid growth, from 43,000 customers in 2017 to 3.6 million in 2023, Starling’s financial crime controls did not keep pace.
In 2021, the FCA raised serious concerns about Starling’s anti-money laundering (AML) and sanctions framework, leading to a requirement that the bank stop opening accounts for high-risk customers.
However, Starling violated this requirement, opening over 54,000 accounts for high-risk individuals between September 2021 and November 2023.
In January 2023, Starling discovered that its automated screening system had been incomplete since 2017, failing to check customers against the full list of sanctioned individuals. An internal review exposed systemic issues in its financial sanctions framework, leading the bank to report multiple breaches.
"Starling’s financial sanction screening controls were shockingly lax. It left the financial system wide open to criminals and those subject to sanctions. It compounded this by failing to properly comply with FCA requirements it had agreed to, which were put in place to lower the risk of Starling facilitating financial crime."
- Therese Chambers, Executive Director of Enforcement & Market Oversight, FCA
Two major Las Vegas casino resorts, MGM Grand and The Cosmopolitan, will collectively pay a settlement of $7.45 million for violating AML regulations linked to an illicit sports betting scheme.
The US Attorney’s Office for the Central District of California revealed that the casinos failed to adhere to Bank Secrecy Act (BSA) requirements concerning the reporting of suspicious transactions. Former MGM Grand President Scott Sibella pleaded guilty to failing to report such transactions during his tenure from August 2017 to February 2022.
The charges against Sibella and subsequent legal actions against MGM Grand and The Cosmopolitan are connected to an illegal bookmaking operation managed by Wayne Nix. Sibella admitted to knowing about Nix's illegal sports betting ring but allowed him to gamble at the casino nonetheless.
By permitting Nix to gamble at the MGM Grand, the casino failed to conduct proper source of funds (SOF) checks and potentially facilitated the laundering of criminal proceeds from illegal gambling activities.
Similarly, The Cosmopolitan admitted that one of its casino hosts was aware of Nix's illegal business and allowed him to gamble with illicit funds without informing the compliance department.
Canada’s anti-money laundering agency, FINTRAC, has imposed its largest-ever fine of nearly C$9.2 million ($6.71 million) on TD Bank for non-compliance with AML regulations.
The penalty, issued after a 2023 compliance review, highlights the bank's failure to report suspicious transactions, assess and document money laundering and terrorist financing risks, and conduct proper monitoring of high-risk business relationships.
TD Bank has been facing multiple regulatory probes in both Canada and the US regarding its AML compliance programme, which has negatively impacted its stock performance. CEO Bharat Masrani admitted that the bank’s AML programme was inadequate and stated that improvements are underway.
Danske Bank has reached a final settlement with French authorities, agreeing to pay €6.3 million following investigations into suspected money laundering at its now-closed Estonian unit. This amount is significantly lower than the $2 billion the bank paid in a similar settlement in the United States.
The investigations stemmed from a 2018 scandal, where Danske Bank's Estonian branch was at the center of one of Europe's largest money laundering cases, involving around €200 billion laundered by suspicious customers.
AIA Group Ltd. has been fined a record HK$23 million ($2.9 million) by Hong Kong’s Insurance Authority for deficiencies in its anti-money laundering (AML) processes. This is the largest fine issued by the regulator since it began overseeing insurance companies in 2017.
The penalty follows an inspection that uncovered technical issues in AIA’s AML system and algorithm, which led to some politically exposed persons not being flagged promptly, delaying the verification of their financial sources. Despite these issues, no inappropriate policies were sold.
The fine comes as Hong Kong intensifies scrutiny of the insurance sector, particularly due to increasing business from mainland Chinese clients. AIA's shares dropped by 2.5% following the news. The company emphasized that no evidence of money laundering or improper onboarding was found, and it is cooperating with the regulator, submitting a report on its remedial actions from an independent advisor.
HMRC has revealed that 254 estate agency businesses faced fines totalling over £1.6 million for failing to register or re-register for AML compliance. Penalties ranged from £1,500 to over £50,000.
“Registering with HMRC is one of the most basic requirements of the Money Laundering Regulations (MLR). However, so many businesses fail to complete this simple obligation, either by ignorance or by believing that the regulations simply do not apply to them.”
- Malcolm Driscoll, Lead AML Consultant, FCS Compliance
HMRC plans to release a follow-up list detailing additional penalties for breaches, including inadequate documentation, incomplete or incorrect Customer Due Diligence (CDD), and failure to recognise specific risks.
Driscoll emphasised the need for businesses to comply with AML obligations, likening them to legal requirements for driving. HMRC's inspections will inform further penalties, highlighting the necessity for accurate AML policies, regular staff training, and thorough CDD procedures to mitigate risks and avoid hefty fines.
Germany's financial watchdog, BaFin, has penalised Commerzbank with a fine of 1.45 million euros ($1.5m) for failing to fulfil its anti-money laundering responsibilities. BaFin stated that both Commerzbank AG and its predecessor, comdirect Bank AG, neglected their supervisory duties.
The bank failed to update customer data promptly and implement sufficient security measures, leading to inadequate due diligence in three instances, thus breaching anti-money laundering obligations.
Fairbrother & Darlow, a law firm in Bracknell, has been fined £16,000 by the Solicitors Regulation Authority (SRA) for lacking adequate AML controls over nearly six years. This penalty is part of a trend, with other firms collectively fined almost £50,000 last month for similar breaches.
The SRA's review, conducted almost two years ago, revealed the firm's failure to comply with the Money Laundering Regulations of 2017, including the absence of firm-wide risk assessments and policies. Despite submitting a declaration of compliance in 2020, the firm only achieved compliance in 2023, demonstrating a prolonged pattern of non-compliance and recklessness.
The SRA emphasised that the firm disregarded guidance and warning notices, posing risks to the public interest and confidence in the legal profession. Based on a percentage of annual domestic turnover, the financial penalty was placed in the mid-range due to the seriousness of the misconduct. However, the SRA recognised the firm's cooperation with the investigation, admissions, and efforts to remedy the breaches as mitigating factors.
In terms of trends, there's a pronounced global shift towards emphasising enhanced due diligence. In Europe, recent regulations in 2024 spotlight Customer Due Diligence (CDD) and the disclosure of beneficial ownership information for financial institutions.
Meanwhile, in the Asia-Pacific region, regulators are advocating for more rigorous due diligence procedures to mitigate risks inherent in cross-border transactions. Africa is also working to bolster transparency regarding beneficial ownership for various entities.
This concerted global effort underscores the necessity of acquiring comprehensive information about customers and entities to fortify AML/CFT programmes and ensure compliance, curbing money laundering and terrorist financing activities.
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