2022 saw an unprecedented surge in fines issued by global financial services
regulators, according to SteelEye’s Fine Tracker. Its newest report analyzed
financial penalties imposed by five key regulators showing that the overall
amount of fines exceeded $7 billion.
SteelEye’s
inaugural Fine Tracker analyzed financial penalties issued by the US Securities
and Exchange Commission (SEC), the British Financial Conduct Authority (FCA ), the
French L’Autorité des Marchés Financiers (AMF), the German BaFin and the Federal
Office of Justice (FoJ).
The US SEC
led the way in penalties, with a record $6.4 billion in fines issued, which
included a $1.1 billion fine resulting from its crackdown on WhatsApp. A total
of 16 Wall Street giants were fined for failing to adequately monitor their employees’ behavior and prevent them from using unauthorized instant
messaging to exchange confidential information.
“These
communication channels are becoming ubiquitous in certain markets, and yet
SteelEye’s 2022 Compliance Health Check report, which surveyed 170 senior
compliance professionals in financial services, found that just 15% of firms
are monitoring WhatsApp,” Brian Lynch, the President of SteelEye Americas,
explained.
According
to SteelEye’s data, even fewer monitors Slack (9%) and Signal (3%). Regarding
the most popular communicators, there is a lot of work to be done: in the
case of Microsoft Teams, only 40% of investment and financial firms monitor this
platform and 25% monitor Zoom.
The $6.4
billion in penalties imposed by the SEC is a new record and is almost double the
$3.9 billion in 2021. Although the number of enforcement actions was smaller
than in the years before the pandemic, 2022 saw a 9% increase over the earlier
year.
“I
continue to be impressed with our Division of Enforcement. These numbers,
though, tell only part of the story. Enforcement results change from year to
year. What stays the same is the staff’s commitment to follow the facts
wherever they lead,” Gary Gensler, the SEC Chair, said.
Allianz
Global Investors US LLC (AGI US) had to pay more than $1 billion in connection
with an allegedly fraudulent scheme that concealed the risks of a complex
options trading strategy called ‘Strucuted Alpha’. Around 114 institutional
investors purchased the strategy from AGI US, and billions of dollars were lost due to its misconduct.
Watch the recent FMLS22 panel discuss “Regulation Roundup: Everything You Need to Know for 2023.”
Financial Penalties in
Europe
Meanwhile,
the FCA saw a marked increase in fines issued in 2022, with 26 compared to 10
in 2022. However, the total value of these fines decreased from £567.77 million
in 2021 to £215.83 million in 2022. The highest penalty had to be paid in December 2022 by Santander UK for failing to properly oversee and manage its AML systems for almost five years.
Between
2020 and 2022, the FCA imposed almost £1bn in fines, 43% related to inadequate
compliance with governance and control regulations.
“There
remains a lot of work to be done by financial services firms to ensure they do
not fall short of their obligations. As regulators get more aggressive in their
enforcement action, firms need to really think about how robust their
compliance programs and policies are. Particularly against the backdrop of
recession fears, pressure to perform is mounting. With that, firms of all sizes
are putting de-risking strategies in place,” Matt Smith, the CEO and
Co-Founder of SteelEye, said.
Germany’s
financial regulators, BaFin and FoJ, imposed 46 fines in 2022, the majority
being due to reporting delays. The penalties totaled €24.61 million. On the
other hand, France’s stock market regulator fined companies a total of €95
million, including a single fine of €75 million for violations of professional
obligations.
The Dutch AMF
issued only three fines, all of which were related to money laundering and amassed to €903,000.
2022 saw an unprecedented surge in fines issued by global financial services
regulators, according to SteelEye’s Fine Tracker. Its newest report analyzed
financial penalties imposed by five key regulators showing that the overall
amount of fines exceeded $7 billion.
SteelEye’s
inaugural Fine Tracker analyzed financial penalties issued by the US Securities
and Exchange Commission (SEC), the British Financial Conduct Authority (FCA ), the
French L’Autorité des Marchés Financiers (AMF), the German BaFin and the Federal
Office of Justice (FoJ).
The US SEC
led the way in penalties, with a record $6.4 billion in fines issued, which
included a $1.1 billion fine resulting from its crackdown on WhatsApp. A total
of 16 Wall Street giants were fined for failing to adequately monitor their employees’ behavior and prevent them from using unauthorized instant
messaging to exchange confidential information.
“These
communication channels are becoming ubiquitous in certain markets, and yet
SteelEye’s 2022 Compliance Health Check report, which surveyed 170 senior
compliance professionals in financial services, found that just 15% of firms
are monitoring WhatsApp,” Brian Lynch, the President of SteelEye Americas,
explained.
According
to SteelEye’s data, even fewer monitors Slack (9%) and Signal (3%). Regarding
the most popular communicators, there is a lot of work to be done: in the
case of Microsoft Teams, only 40% of investment and financial firms monitor this
platform and 25% monitor Zoom.
The $6.4
billion in penalties imposed by the SEC is a new record and is almost double the
$3.9 billion in 2021. Although the number of enforcement actions was smaller
than in the years before the pandemic, 2022 saw a 9% increase over the earlier
year.
“I
continue to be impressed with our Division of Enforcement. These numbers,
though, tell only part of the story. Enforcement results change from year to
year. What stays the same is the staff’s commitment to follow the facts
wherever they lead,” Gary Gensler, the SEC Chair, said.
Allianz
Global Investors US LLC (AGI US) had to pay more than $1 billion in connection
with an allegedly fraudulent scheme that concealed the risks of a complex
options trading strategy called ‘Strucuted Alpha’. Around 114 institutional
investors purchased the strategy from AGI US, and billions of dollars were lost due to its misconduct.
Watch the recent FMLS22 panel discuss “Regulation Roundup: Everything You Need to Know for 2023.”
Financial Penalties in
Europe
Meanwhile,
the FCA saw a marked increase in fines issued in 2022, with 26 compared to 10
in 2022. However, the total value of these fines decreased from £567.77 million
in 2021 to £215.83 million in 2022. The highest penalty had to be paid in December 2022 by Santander UK for failing to properly oversee and manage its AML systems for almost five years.
Between
2020 and 2022, the FCA imposed almost £1bn in fines, 43% related to inadequate
compliance with governance and control regulations.
“There
remains a lot of work to be done by financial services firms to ensure they do
not fall short of their obligations. As regulators get more aggressive in their
enforcement action, firms need to really think about how robust their
compliance programs and policies are. Particularly against the backdrop of
recession fears, pressure to perform is mounting. With that, firms of all sizes
are putting de-risking strategies in place,” Matt Smith, the CEO and
Co-Founder of SteelEye, said.
Germany’s
financial regulators, BaFin and FoJ, imposed 46 fines in 2022, the majority
being due to reporting delays. The penalties totaled €24.61 million. On the
other hand, France’s stock market regulator fined companies a total of €95
million, including a single fine of €75 million for violations of professional
obligations.
The Dutch AMF
issued only three fines, all of which were related to money laundering and amassed to €903,000.