Global Financial Institutions Experience Decrease In Regulatory Penalties During H1 2023


A new report by Fenergo[1], a provider of digital solutions for client lifecycle management (CLM), has found that regulatory penalties for global financial institutions saw a sharp decline in H1 2023. The report found that the total value of fines issued in the first six months of the year was $189 million, down from $1.58 billion in the same period last year. This represents an 88% decrease.

The report attributes the decline in fines to a number of factors, including:

  • Increased focus on cooperation with regulators: Financial institutions are increasingly cooperating with regulators, which is leading to fewer enforcement actions.
  • Improved compliance practices: Financial institutions are investing in compliance technology and procedures, which is helping them avoid regulatory violations.
  • More lenient enforcement: Regulators are becoming more lenient in their enforcement actions, which is leading to lower fines.

Global Financial Institutions Experience Decrease

The decline in regulatory penalties is good news for financial institutions, but it is important to note that it does not mean that they are no longer at risk of enforcement actions. Financial institutions need to continue to invest in compliance and cooperate with regulators in order to avoid fines. The report also found that the United States was the most active jurisdiction for regulatory enforcement actions in H1 2023, with 97 fines issued. This was followed by the European Union, with 34 fines, and Asia Pacific, with 25 fines.

The most common types of regulatory violations that led to fines in H1 2023 were anti-money laundering (AML) violations, sanctions violations, and Know Your Customer (KYC) violations. The report concludes that the decline in regulatory penalties is a positive trend, but it is important for financial institutions to remain vigilant and continue to invest in compliance.

In addition to the factors mentioned in the report, there are a few other possible explanations for the decline in regulatory penalties. One possibility is that regulators are focusing their resources on more serious violations. Another possibility is that regulators are taking into account the impact of the COVID-19 pandemic on financial institutions when making enforcement decisions.

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Regardless of the reasons for the decline, it is clear that financial institutions are facing a changing regulatory landscape. Financial institutions need to stay up-to-date on the latest regulations and make sure that they have the right compliance controls in place.

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