Banking Giants Face Heat Over Compliance Failures

Crackdown on Money Laundering and Financial Crimes

The US government has taken aim at several major banks for their failure to adequately comply with anti-money laundering (AML) regulations, aiming to crack down on money laundering and other financial crimes.

Banks Fined and Penalized

Standard Chartered, ING, Barclays, and Lloyds are among the banking giants that have been slapped with Deferred Prosecution Agreements (DPAs) in recent years. These agreements come with hefty fines and penalties, as well as strict requirements for improved compliance.

Compliance Failures

The government’s investigation found that these banks failed to:

• Adequately monitor high-risk accounts
• Perform adequate customer due diligence
• Provide sufficient resources and training to their compliance departments

Knowledge of Money Laundering Risks

The government’s investigation also found that these banks had knowledge of money laundering risks within their business activities, but failed to take adequate steps to mitigate those risks. For example:

• Standard Chartered was accused of hiding transactions with Iranian banks in violation of US sanctions
• Barclays was cited for failing to take adequate steps to monitor accounts tied to a known money launderer

Consequences of Non-Compliance

The penalties for non-compliance are severe, including:

• Fines ranging from tens of millions to hundreds of millions of dollars
• Individual executives can face criminal charges and even imprisonment

Changing Behavior

“These DPAs are not just about writing checks, they’re about changing behavior,” said a government official. “We want these banks to take responsibility for their actions and start doing things right.”

Industry Impact

The investigation and subsequent penalties have sent shockwaves through the banking industry, with many experts predicting a renewed focus on compliance in the coming years.

• “The era of lax compliance is over,” said one expert. “Banks need to get serious about AML or face the consequences.”
• “Compliance is not optional,” said a banking industry expert. “These banks need to get their houses in order and start taking AML seriously.”