Westpac Paid $1.3 Billion for AML Breaches
Last year, Westpac bank in Australia was number 5 on the list of banks with the highest penalties. The court penalised Westpac with a fine of $1.3 billion. AML laws were breached at different intervals. Westpac not only violated AML/CFT laws but also failed to employ transaction monitoring and did not submit IFTI reports to AUSTRAC. Furthermore, the bank did not perform enhanced due diligence for high-risk transactions as suggested by FATF.
SEB Bank Fined $107 Million for Poor AML Measures
Next in the list of KYC/AML non-compliance is Lloyds Bank that was fined $107 million by the City watchdog for unfair treatment of mortgage customers. According to the executive director of enforcement and market oversight of Financial Conduct Authority (FCA),
“Banks are required to treat customers fairly, even when those customers are in financial difficulties or are having trouble meeting their obligations. By not sufficiently understanding their customers’ circumstances the banks risked treating unfairly more than a quarter of a million customers in mortgage arrears.”
Reasons Behind Hefty Penalties on Banks
The major reason behind all these hefty penalties is the banks’ inability to follow the regulations imposed by higher authorities. However, there are several other reasons resulting in increasing fines and growing rigidity of regulations. They include,
- Consistent failures to comply with the Anti-Money Laundering laws
- Lack of proper customer due diligence
- No transaction monitoring measures taken
- Overseen cases of compliance monitoring
Did you know that the highest number of cases of AML law violations have been reported in 2020? Here’s an overview of the number of cases reported last year:
- 82 cases of transaction monitoring
- 109 cases of poor AML compliance
- 115 cases of lack of customer due diligence
If banks continue to lack robust verification and AML systems, the numbers will increase this year as well.
Suggested: A Comprehensive Guide to AML Compliance [2020]
What Can You Do to Prevent Fines in 2021?
Other enterprises in the finance sector must comply with the KYC/AML regulations at all costs. Otherwise, heavy penalties will be their fate in 2021 as well. How can banks and other financial enterprises prevent fines this year? Well, here’s what you should do:
- Take a look at the amended laws from regulatory authorities
- Audit your current identity verification protocols
- Ensure robust KYC/AML compliance measures within the company
- Never onboard any customer without verification
- Always perform enhanced due diligence (EDD) checks for high-risk customers
- Ongoing transaction monitoring must be employed to prevent money laundering
Read more: Shufti Pro’s Ongoing AML Solution to Prevent Transaction Laundering
How Can Shufti Pro Help You?
Penalties on financial institutions are increasing every year and 2020 broke records. The major reasons for hefty penalties included poor customer screening and inefficient AML compliance procedures. Furthermore, damaged brand reputation is another setback for companies. In order to protect your organisation from criminal activities and heavy penalties, it is better to employ KYC/AML verification.
Shufti Pro is a one-stop solution for all your needs. With AI-powered identity verification and AML screening, you can verify all the customers during the onboarding process. Moreover, the ongoing AML screening allows you to screen the backgrounds of high-risk customers as per your requirements. With 98.67% accuracy of our solutions, you can get in touch with the right customers.
Talk to our experts and add robust identity verification protocols to protect your company.
