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Banks have paid $36bn in fines since the 2008 financial crisis

Edmund Heaphy
·Finance and news reporter
·2-min read
London skyline
Major banks Citibank, HSBC and Barclay's in London's Canary Wharf financial district. Photo: Toby Melville/Reuters

Banks have paid upwards of $36bn (£28bn) in fines since the 2008 financial crisis, with penalties swelling to almost $10bn in 2019 alone.

Some 12 of the world’s top 50 banks were penalised last year, according to data compiled by regulatory technology firm Fenergo.

Swiss banks were the worst offenders in 2019, thanks to the $5bn (£3.8bn) in fines and damages handed to UBS (UBS) for helping French clients evade tax authorities.

Italian banks, meanwhile, racked up $1.5bn in total fines for sanctions violations and breaches of the EU’s GDPR privacy regulation, Fenergo said on Wednesday.

The vast majority of fines issued by US authorities targeted European banks for anti-money laundering breaches and violations of economic sanctions with countries such as Iran, North Korea, and Libya.

In late 2018, France’s Société Générale (GLE.PA) agreed to pay more than $1.3bn in penalties for processing and concealing transactions with countries that were under sanction.

Over the 10-year period between 2003 and 2013, the bank engaged in thousands of transactions involving parties in Iran, Cuba, and Sudan, in violation of US sanctions.

Fenergo pointed to heightened geopolitical tensions as an explanation for the rise in fines in 2019. Some 86% of fines issued by US authorities since the firm’s 2018 report were for sanctions violations, it said.

The US introduced new sanctions against Iran in November 2018, months after US president Donald Trump withdrew from the Iran nuclear deal. Trump in September 2019 told his treasury department to increase sanctions on the country.

“Financial institutions are required to be vigilant in identifying sanctioned entities and individuals through robust screening processes,” Fenergo said.

One of the more notorious fines in the past decade was levied on HSBC, which the US justice department said was used to launder $880m in money between a Mexican and Colombian drug cartel.

HSBC (HSBC.L) agreed to pay a record $1.92bn in fines to US authorities following the scandal.

Financial institutions were meanwhile fined a further $82.7m in 2019 for data privacy breaches and violations of the EU’s markets in financial instruments directive, which is designed to increase transparency in the investment industry.

“2019 was another record year for fines, the second-biggest in history, and 2020 is shaping up to be a very busy year in this space,” said Laura Glynn, the global compliance and regulatory director of Fenergo.

Rachel Wooley of Fenergo said that many of the institutions penalised in 2019 for money laundering-related activities “lacked appropriate systems and compliance infrastructures that are necessary to identify and address areas of high risk.”