Encompass has carried out an analysis of anti-money laundering (AML) related penalties handed down between 1 January and 31 December 2019. The research found that 58 AML penalties were handed down globally in 2019, totalling US$8.14bn. This is double the amount, and nearly double the value, of penalties handed out in 2018, when 29 fines of US$4.27bn were imposed.

Regulators in the US were most active, handing out 25 penalties totalling $2.29bn. The UK followed with 12 fines totalling US$388.4m. The largest monetary fine was $5.1bn and originated from France. The average monetary fine for 2019 was $145.33m.

2019 was a record year, in terms of number of AML penalties handed out (58), ahead of 2016 (47). Under half of penalties given out in 2019 were to banks (28 of 58), compared to two-thirds in 2018 (20 of 29). Penalties were handed down by regulators across multiple jurisdictions beyond the US and UK, including in Belgium, Bermuda, France, Germany, Hong Kong, India, Ireland, Latvia, Lithuania, the Netherlands, Norway and Tanzania.

While 2014 still holds the record for the highest total value of fines at US$10.89bn, this includes an anomalously large penalty of US$8.9bn. If this were to be removed, 2019 would take the title of the highest total value of fines related to AML.

Speaking about the findings, Encompass CEO and co-founder Wayne Johnson commented that annual AML penalty figures have been steadily rising each year since 2015. Multi-million dollar fines have been commonplace for a while, but we are now seeing more penalties of one billion dollars or over, with two in 2019 alone. 

“Historically, the majority of these fines have been given to banks, but this year the proportion was less than half, demonstrating that money laundering is now recognised as a general business issue, not just one that is specific to financial services,” Johnson said. “Regulators in the gambling/gaming sector were particularly active in 2019, handing out five fines, all of which were well over US$1m and the highest being US$7.2m. Interestingly, four of these were in the UK, demonstrating a crackdown here.”

The US continues to lead the way, having handed out the most penalties this year at 25 - more than twice the amount of the UK, the country in second place.

“Given that these two countries have transparent regulatory cultures and active regulatory bodies, we expect we shall continue to see the largest number of fines originate from here, but we are seeing activity from increasing numbers of jurisdictions as time goes on,” Johnson added. “For example, in 2019, penalties were handed out by 14 countries, compared to just three a decade ago in 2009. We are not expecting the spotlight on money laundering to dim. The continued and increased focus on this area highlights the severity with which it is viewed at a global level, which is not surprising given the negative economic and societal repercussions it can have. As we head into 2020, we shall continue to monitor and analyse AML penalty data with interest to see how it evolves.”

Methodology

The underlying data for this analysis was supplied by Dr Henry Balani, head of Delivery Services at Encompass, and a recognised compliance and AML specialist and academic. All data was compiled from reputable national news sources and cross referenced against regulator websites where available. Penalties and actions from active jurisdictions where cross-border financial transactions are high were included in the research. While, occasionally, there are smaller, less active jurisdictions or agencies that impose penalties, these amounts are typically smaller and do not necessarily affect overall trends and were not included in this research.