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For Compliance Industry, 2013 was a Year of Fewer Large Fines But Tougher Demands
By Colby Adams, Brian Monroe and Brian Orsak
printThere were no Kardashians, no unabashed crack-smoking mayors nor even any shamed celebrity politicians in the financial compliance world in 2013. Relative to the year before, the anti-money laundering (AML) compliance industry drew few headlines over the past 12 months, and yet no one would tell you their job got any easier. For one, compliance officers contended with the ever uncontrollable and often unpredictable politics. As in 2012, U.S. relations with Iran weighed heavily on financial institutions, which were charged with identifying and blocking an increasing number of transactions. After implementing a raft of new restrictions targeting businesses that trade...
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Federal regulators of anti-money laundering rules issued 16 percent more enforcement actions in 2015 than in the previous year, a jump due in part to an intensified focus on nonbank firms.
Sometimes a decline in bank enforcement actions isn't a good thing, even for bankers. Such is the takeaway of a review of enforcement action data spanning back five years, during which the number of formal Bank Secrecy Act penalties fell nearly 20 percent while fines and regulatory demands grew.
In the messy art of prognostication, everything is overly easy and nothing exact, not even compliance expectations. But one thing government officials and financial industry representatives seem certain of: 2015 will prove just as challenging as the past year for AML professionals.
The number of enforcement actions issued annually by the top regulator of large U.S. banks declined in 2013, according to a semiannual report on risk published Wednesday by the agency.
In a year when the number of enforcement actions issued by federal financial regulators fell by nearly half, Bank Secrecy Act-related penalties earned an unusual distinction. They declined by less than 14 percent.
Last year, I told you not to believe any of that "best of years, worst of years" stuff à la Charles Dickens with regard to 2012. But if 2013 was less eventful than the prior year, every indication is that 2014 will be "challenging" for financial institutions and regulators.
With plenty of convincing reasons, representatives of the law enforcement and compliance industry say the coming year is fraught with serious challenges.
Fines and monetary settlements paid in 2012 by banks for anti-money laundering and counterterrorism financing violations increased 131-fold from the previous year, ACAMS moneylaundering.com data shows.
The annual number of suspicious activity reports filed by money services businesses fell by 14 percent in 2012 compared with the previous year, the U.S. Treasury Department said in a report Wednesday.
Penny stock fraud and soon-to-be introduced customer due diligence regulations should be foremost on the minds of compliance officers at small securities firms, believes Kenneth Cherrier, senior vice president and chief supervisory officer at Overland, KS-based Waddell & Reed, Inc.
Though none can predict the future, one thing in the AML world seems certain: the jobs of compliance officers won't get any easier in 2013.
For many anti-money laundering and sanctions professionals, 2012 will be remembered as a year of record fines. Banks paid billions to settle AML and sanctions compliance violations, with one penalty alone reaching almost $2 billion.
The total number of anti-money laundering enforcement fines handed down by federal regulators rose by 67 percent in 2011 compared to the previous year.
Whether the economy improves or stays flat in 2012, the coming year will pose a number of new challenges for the compliance professionals charged with implementing sanctions and anti-money laundering controls, say industry leaders.
Tax investigations, political turmoil and economic sanctions were among the biggest challenges faced by the compliance departments of financial institutions in 2011, say bank officials and industry experts.
The number of anti-money laundering enforcement actions handed down by federal banking regulators rose nearly 48 percent in the first six months of 2011 compared to the same period last year, data shows.
The number of annual federal banking fines for anti-money laundering violations rose by nearly fourfold in 2010, while the total dollar amount of the monetary penalties rose to over $660 million, according to Moneylaundering.com/ComplianceAdvantage data.
The new year won't be any easier on compliance officials at banks and money services businesses, and could get much harder depending on how U.S. officials implement new and proposed regulations, according to industry leaders.
Regulatory pressure grew on financial institutions in 2010 though few compliance departments saw an increase in budgets or resources in the wake of an 18-month recession, say industry professionals.
The overall number of regulatory enforcement actions against banks jumped 52 percent in the first half of 2010 in comparison to the number issued in the first half of 2009.