A Guide to Anti-Money Laundering for Crypto Firms
2019 is set to be a record year for global anti-money laundering fines as criminal activity continues to threaten the financial landscape and regulatory changes from 2018 (and previous years) begin to take effect.
Research from mid-2019 revealed that, from January to April 2019, authorities handed out around $7.7 billion in AML fines – up from $1.16 billion for the same time frame in 2018, and over 70% of the sum total of fines imposed during the entirety of 2014 ($10.89 billion), the current record-holding year.
The number of fines issued between January and April 2019 amounted to approximately two-thirds less than that of 2018. However, while the number of fines decreased in 2019, the value of those fines increased significantly.
The value of fines in 2018 was $4.27 billion – January to April 2019 was almost double that. While banks continue to receive the majority of fines, the regulatory focus on other sectors, such as gaming and cryptocurrency, is growing.
Key moments and takeaways from the global pattern of AML fines in 2019, include:
The United States:
From January to April 2019, the US imposed a total value of $45.6 million in fines, while penalty fines were also ordered against British Arab Commercial Bank ($4 million) and Standard Chartered ($947 million). Although the US lagged behind the UK and Europe in that 2019 period, it remains the most active regulatory territory in the world, having imposed a total value of $19.85 billion in AML fines between 2002 and April 2019.
The United Kingdom
The UK’s Financial Conduct Authority (FCA) was also part of the penalty action against Standard Chartered, fining the bank over £102 million for failings in its counter terrorism finance controls. The fine was the second-largest ever imposed by the FCA for failures in AML compliance, however, it’s worth mentioning that the FCA was only created in April 2013. Between January and April 2019, the UK imposed $1.23 billion in fines: the penalty actions represent a significant increase in regulatory activity – given that up to 2019, the UK had imposed only $0.44 billion in fines.
Following the US and the UK, since 2002, European authorities issue the most anti-money laundering fines. 2019 saw $6.44 billion in AML fines issued across Europe (in the period between January and April), with $10.43 billion in fines issued since 2002. The European Union’s Anti Money Laundering Directives continue to trigger legislative reform across the bloc, with 4AMLD currently in effect, 5AMLD set to come into effect on 10 January 2020 and 6AMLD to come into effect on June 2021.
There were no anti-money laundering fines issued by regulators in Asia, Africa, Latin America, or Oceania in 2019. Since 2002, Asian regulators have imposed $1.55 billion in fines and Oceanian regulators have imposed $700.1 million – but Latin American ($33.7 million) and African ($13 million) regulatory bodies have traditionally lagged behind. The disparity reflects the lack of transparency in Latin American and African territories, compared to the larger Asian and Oceanian markets, and the ability of regulators to enforce regulations and AML fines.
Ongoing Regulatory Focus
The significant increase in anti-money laundering fines in 2019 reflects the shifting focus of global and domestic regulators and the evolving capabilities of AML/CFT technology to spot criminal activity. That shift accompanies a widespread cultural change within financial institutions towards supervision, and towards building smarter, automated AML programs which meet the needs of regulators more effectively.
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Originally published October 23, 2019, updated August 25, 2022
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