H1’23 Recap: Know Your Business and Anti-Money Laundering Fines Worldwide

Throughout the world, money laundering is considered one of the most hideous crimes. It has cost several businesses their reputation, hefty fines, and penalties. In the global financial system, know your business and anti-money laundering violation has become a concern. According to a report by the Financial Conduct Authority (FCA), so far, £35,167,900 has been charged as a penalty to several industries. The KYB has compiled a list of fines and penalties faced by the businesses, including their reasoning. Nonetheless, we have also discussed the recent development in the regulatory framework and suggested how to stay fully compliant with the Know Your Business and Anti-Money Laundering (KYB AML) regulations in 2023.

KYB and AML Regulations

Money laundering has become one of the most pressing crimes in 2023. Many businesses, in 2023, faced fines, penalties, reputational loss, and a complete exit from the corporate world. KYB, called Know Your Business or business verification, is a due diligence process for businesses that validate a business identity. KYB due diligence verifies that the company you are dealing with is authentic and real. On the contrary, AML or Anti-Money Laundering regulations carry out checks on an organization and individual, which establish its authenticity and credibility. Nonetheless, the primary purpose of Know Your Business (KYB) and Anti-Money Laundering (AML) regulations is to authenticate the credibility of individuals and businesses while protecting the integrity of the financial ecosystem. 

A Quick Recap of 2023 Fines and Penalties

The first half of 2023 has undoubtedly seen a surge of 88% in regulatory penalties, comparatively to the last year and sees no sign of taming down in the new future. As we are already navigating our path in the digital era and making our online presence count, so do the scammers. With technological advancement, scammers have devised sophisticated ways to exploit the financial system, leaving businesses in vain. Regulators from all over the world levied 97 fines in total during the first half of 2023. Let’s take a look back at the significant penalties enterprises face. You can see which company received the most penalties in the graphic below.

Since you have seen the chart, let’s dive into the five significant penalties businesses face and their reasoning. 

Danske Bank – Fined $2B by SEC

Different regulatory bodies fined the Danske Bank in Denmark for failing to comply with the Anti-Money Laundering compliance. The bank was exposed for lying about its transaction monitoring system’s effectiveness and AML solutions. Following the agreements, Danske Bank paid $1.21 billion to the Justice Department, $178.6 million to the SEC, and $678 million to Danish authorities, making it one of the largest fines of 2023. 

In 2018, Danske Bank confirmed a large portion of the money coming from Estonia had a suspicious origin. Instead of drafting the regulatory bodies, they hid the nature of their transactions. Yet, it is not clear how much of it was money laundering. As a result, the bank had to pay $2 billion to the US regulators and authorities.

Crown Resorts – Fined $450M by AUSTRAC

The Australian Transaction Reports and Analysis Centre (AUSTRAC) penalized Crown Resorts over $450 million for prior violations of Australia’s anti-money laundering rules at its casinos in Melbourne and Perth. Crown accepted its failure to adequately comply with money laundering and terrorist financing risks faced by the casino and not having a proper risk-assessing system to mitigate risks.

Capital One – Fined $390M by FinCEN

The Financial Crimes Enforcement Network (FinCEN) fined Capital One for carelessly and deliberately failing to comply with the Bank Secrecy Act (BSA). Capital Once accepted that they failed to submit thousands (over 20,000 reports totalling $160 million) of Suspicious Activity Reports (SARs), also neglected and were unable to file over 50,000 transactions totalling over $16 billion Currency Transaction Reports (CTRs) between 2008 to 2014, and required to pay a penalty of $390 million by FinCEN.

NatWest – Fined $350M by FCA

NatWest was fined $350.9 million for failing to prevent £400 million money laundering. A gang deposited thousands of pounds in over 50 NatWest branches, with at least each branch receiving £40 million individually. As a failure to identify and prevent the act of money laundering, NatWest was charged £265 million and confiscation of £460,000 gained by NatWest from Fowler Oldfield by the Financial Conduct Authority (FCA) for over £400 million laundered amount.

USAA Bank – Fined $140M by FinCEN

The Financial Crimes Enforcement Network (FinCEN) charged USAA Federal Saving Bank (USAA FSB) for $140 million after conducting a civil enforcement investigation. From January 2016 to April 2021, USAA failed to implement Anti-Money Laundering (AML) requirements that meet the Bank Secrecy Act (BSA) criteria. Aside from the inadequate money laundering maintenance and implementation, USAA failed to report thousands of suspicious transactions that involved its customer’s financial data accurately to the FinCEN.

Main Regulations in 2023

Regulatory authorities around the globe introduced more sturdy regulations in 2023 for businesses to follow and minimize financial crimes. The main regulations introduced in 2023 include:

• Implementation of Recommendation 16 or Travel Rule of the Financial Action Task Force (FATF)
• The EU’s Markets in Crypto Assets (MiCA) 
• The future development of an AMLA in the EU
• Updated rules on the UBO Report in the US
• Launch of the COSMIC platform in Singapore 
• Modifications to the UK’s reporting requirements for substantial differences
• Increased business numbers to comply with AML laws in Canada

Nonetheless, it is important to adhere to the KYB regulations and implement them into the current system as soon as possible to avoid financial crimes, hefty fines, sanctions, and permanent exit from the business world.

How to Avoid KYB and AML Fines?

Avoiding Know Your Business and Anti-Money Laundering fines is easy; just comply with the regulation, but how exactly can businesses do this, as they have too much to look after? Here are a few things that you can implement to avoid know your business and AML fines:

• Appointing or hiring a Money Laundering Reporting Officer (MLRO)
• Assessing risks associated with companies and individuals 
• Introducing adequate identity verification and onboarding procedures for clients
• Reporting suspicious activities timely to the authorities
• Conducting due diligence or enhanced due diligence checks
• Maintaining customer records
• Providing effective employee training
• Implementing transaction monitoring solutions
• Implement new relevant policies introduced

It should be noted that this may sound simple and easy to do. But it requires effort, time, resources, and knowledge about the industry. Avoiding know your business and AML fines and implementing an adequate verification process can be complicated and lengthy. However, it is always a wise idea to work with know your business service provider, who can help you create custom flows, keep conversion high, reduce effort, be within budget and time, as well as provide bulletproof KYB compliance.