First Half of 2018: Global Crimes and Heavy Fines

On: August 02, 2018

Financial institutions are faced with a dire reality that their Anti Money Laundering (AML) programs may not be compliant with card brand and international, federal or state regulations.

Hong Kong-based consultants, Quinlan and Associates, estimates U.S. regulators have imposed over $17 billion in AML-related penalties since 2009. The financial services consultancy predicts that given international terrorism concerns, AML enforcement will remain a priority in the U.S and inadequate, internal AML/CTF controls could be costly.

Financial institutions are exposed to the serious risks of attracting high penalties and reputational damage, should their compliance monitoring practices fall short of regulatory standards. Recently, international regulators have been cracking down on slipshod compliance and enforcement procedures in banking industries worldwide.

In our previous blog, we discussed the high-cost history of money laundering and the punishments dished out to banks who did not comply with U.S. AML legislation. In this post, we expand our view to look at the most recent financial fraud and money laundering penalties globally.

Major AML Fines So Far In 2018

Commonwealth Bank of Australia

In June 2018, the Commonwealth Bank of Australia (CBA) agreed to pay AUS $700 million ($530 million), the biggest fine in Australian corporate history.  AUSTRAC, Australia’s financial intelligence agency, accused CBA of failing to report suspicious activities that may have resulted in millions of dollars being diverted to drug importers.

CBA admitted the failure in reporting 53,506 transactions that exceeded $10,000 or more, blaming the oversight on a single coding error. CBA neglected to perform checks on 80 suspicious customers without sufficiently assessing risks posed by its Intelligent Deposit Machines (IDMs), and ultimately failed to report millions in suspected money laundering transactions.

AUSTRAC found other irregularities as well and the bank’s Chief Executive acknowledged the seriousness of the breaches. So far, CBA has spent about AUS$400 million on advanced technology and personnel, trying to enhance their AML process.

Danske Bank

In December 2017, the Estonian branch of Danske bank was fined 12.5 million Danish crowns ($2 million) for violating AML rules. According to media reports, these allegations have been piling up against Danske Bank since 2013. Danske Bank was eventually outed by a whistleblower, who claimed that billions of dollars of suspicious transactions were made between 2007 and 2015 primarily with Russia, Azerbaijan, and Moldova.

Estonia’s Financial Supervisory Authority (FSA) is currently investigating whether Denmark’s biggest bank deliberately withheld information from the regulator post inspections of its Estonia branch in 2014.  Shares of the bank dropped after the news with concerns of the future of Danske Bank, and if there will be additional fines or loss of customers. A statement regarding Danske’s internal investigation is expected to be made in September 2018.


Chuck Blazer, former FIFA executive committee member, was the first key cooperating witness for the F.B.I. in the international corruption investigation for accepting bribes in the 1998 and 2010 World Cup bids. In exchange for a minimal sentence, he pleaded guilty to racketeering, wire fraud, income tax evasion and money laundering.

Héctor Trujillo, the former president of Guatemala’s soccer association admitted to accepting and laundering hundreds of thousands of dollars was the first defendant to be sentenced. He received an eight-month prison sentence in October 2017.  The judge noted that had used the U.S. banking system and routed bribe money through a construction company.

The U.S. case against FIFA involves more than 40 defendants, but not all who pleaded guilty have been sentenced yet. The corruption investigation has become a lengthy, costly endeavor that has damaged the reputation of FIFA worldwide. To add to the ongoing saga, in July 2018, a massive fine of $24 million was incurred by Imagina, a Spanish media group, for bribing soccer officials to secure media rights during World Cup games.

Canara Bank in India

This year, Britain’s Financial Conduct Authority (FCA) fined the UK division of India’s Canara Bank 896,100 pounds ($1.2 million) for consistently failing to address inadequate money laundering controls, despite regulatory warnings dating back to 2012. The FCA also blocked the bank from accepting new deposits for close five months while the investigation was underway.

The regulator identified a number of inadequate controls including AML risk management that was “not fit for purpose” – an inability to flag unusual transactions and failure to identify politically exposed persons (PEPs).

Since then, the FCA has expressed satisfaction that the deficiencies were rectified. On a positive note, by agreeing to settle early and take additional compliance-related measures, the bank qualified for a discount of 30 percent off the original fine.

Standard Chartered Bank

In March 2018, Singapore’s centralized bank has fined more than $4 million to Standard Chartered Bank (SCBC) and Standard Chartered Trust of Singapore (SCTS) for money laundering breaches and countering terrorist financing requirements.

The breaches occurred when SCBS customers’ trust accounts were transferred to SCTS. Questions arose whether the clients were attempting to avoid their Common Reporting Standards (CRS) obligations by using this transfer as a loophole. Standard Charter stated that they regret having inadequately mitigated the potential risks that these transfers posed.

Reported by business media, a Standard Charter spokesperson said some clients had requested the transfer of the administration of their trusts from Guernsey to Singapore, where SCTS is located.

The Bottom Line

As both traditional and electronic money laundering, also known as Transaction Laundering, becomes a growing concern for the financial world, it is crucial for Merchant Service Providers and financial institutions to enhance their AML risk framework by introducing advanced, automated technology.  Choosing the most efficient, accurate compliance tools and monitoring solutions helps keep pace with criminals in our growing digital age and mitigates the risk for fines, regulatory action and brand damage.

To keep track of the latest developments in AML/CTF procedures and measures, for MSPs and financial institutions should keep their fingers on the pulse of the AML community.  You can follow AML experts on various social media for insights on the challenges of implementing controls and the newest advancement in technology to ensure regulatory compliance.

To learn more about AML background, updates and best practices, subscribe to our blog!

Trackback URL: https://evercompliant.com/first-half-of-2018-global-crimes-and-heavy-fines/trackback/

Leave reply:

Your email address will not be published. Required fields are marked *