Global enforcement fines have hit a staggering $5.65bn in the third quarter of 2023, according to a report released by Corlytics.
This figure represents a significant increase from the $1.5bn and $2.27bn recorded in the first and second quarters, respectively.
The bulk of these fines, over 85%, were imposed by US regulators, with the total global amount for 2023 reaching $5.65bn. Notably, DWS Investment Management Americas, a Deutsche Bank subsidiary, was fined $25m by the US Securities and Exchange Commission (SEC) for failing to implement an effective anti-money laundering (AML) program and making misleading environmental, social, and governance (ESG) claims.
In a landmark case, UBS Group agreed to a $1.44bn settlement with the US Department of Justice (DoJ) and the Federal Reserve Board (Fed) over allegations of misconduct related to residential mortgage-backed securities issued before the 2008 financial crisis. This settlement concludes the Justice Department RMBS Working Group’s investigations.
The SEC has been closely monitoring the use of off-channel communications, like WhatsApp, in regulated entities, leading to penalties and a push for firms to review their electronic communications policies. Additionally, the UK Prudential Regulatory Authority (PRA) imposed a record £87m fine on Credit Suisse for risk management failures, part of a global enforcement action that saw combined penalties of $387.5m in the UK and USA.
Susie MacKenzie, Head of Legal & Regulatory Analytics at Corlytics, emphasised the regulators’ focus on counterparty risk management. She noted the Bank of England’s recent communications on the issue and the significant GDPR fines in Europe, citing TikTok’s €345m fine by the Irish Data Protection Commission (DPC) for mishandling children’s data.
Data protection continues to be a critical concern, with the DPC imposing a historic €1.2bn fine on Meta in Q2 2023. This has led to increased demand for stronger data protection measures, with regulatory bodies in Europe and the US responding accordingly.
Enforcement actions have primarily targeted financial crime and corporate governance, with fines for fraud, money laundering, and terrorist financing on the rise. The Financial Conduct Authority (FCA) in the UK fined an Archer Daniels Midland broker affiliate nearly £6.5m for AML deficiencies.
Moreover, conduct, ethics, and consumer protection are gaining attention. The US Consumer Protection Financial Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) fined Bank of America $140m and $60m, respectively, for conduct violations.
Evgeny Likhoded, President at Corlytics, highlighted the challenges in creating effective compliance programs due to the complexity of regulations. He emphasised the importance of technology in strengthening regulatory compliance and fostering a culture of compliance embedded within organisations.
Find the full report here.
Copyright © 2023 RegTech Analyst
Copyright © 2018 RegTech Analyst
