Financial penalties assessed by financial regulators in the US have jumped by 69% versus the year prior when comparing 2023 to 2023, according to a report.Fenergo, a Client Lifecycle Management (CLM) firm serving financial services, has tallied the numbers and claims that penalties stood at around $5 billion in 2023.
According to the report, 99% of total fines imposed were were due to Anti-Money Laundering (AML) / Countering the Financing of Terrorism (CFT) transgressions.
Fines associated with digital asset firms accounted for $4,546,267,523, or 90% of the total fines imposed in the US.
Tracy Moore, Director of Strategy at Fenergo, calls the rise in penalties a wake-up call for firms to incorporate new tools to guard against “regulatory pitfalls” in an “increasingly complex environment.”
She said their findings underscore the regulatory pressure and the need for firms to be proactive.
“As 2024 unfolds, it’s prudent to consider leveraging cutting-edge technologies like machine learning and artificial intelligence to bridge the growing space, reducing the risk of future enforcement actions and fostering a more robust and compliant financial landscape.”
Fenergo did not break down which agencies assessed the penalties as there are multiple financial services regulators in the US that have oversight over the operations of these firms. While many countries have a more streamlined regulatory environment, in the US there are both state and federal regulators and an alphabet soup of federal regulators that can assess penalties. While firms should pursue compliance with vigor, policymakers should be doing their job to streamline financial regulation as the cost is not just applied to the firm, but its stakeholders as well as their customers and end up being a hidden tax on everyone.
