SEC and CFTC impose a combined $9.2bn in penalties in the US in 2023 as FCA fines fall for first time in 7 years
25 January 2024, London/New York: The number of enforcement actions issued to global financial institutions in 2023 reached staggering levels that have rarely been seen in the US, according to SteelEye’s Annual Fine Tracker.
SteelEye analyzed financial penalties issued by the US Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC); the UK’s Financial Conduct Authority (FCA); France’s Autorite des Marches Financiers (AMF); the Netherlands’ Authority for the Financial Markets (AFM); Germany’s BaFin and Federal Office of Justice; and Singapore’s Monetary Authority of Singapore (MAS), to create a snapshot of financial services fines for compliance failures in 2023.
In 2023, the SEC filed a total of 784 enforcement actions, a 3% increase compared to 2022. The 96 enforcement actions filed by the CFTC also increased 17% from 2022, indicating a crackdown on smaller firms by both Commissions. Penalties from the SEC and CFTC totaled $9.2bn, which included a joint fine of $549m against Wall Street banks over the use of WhatsApp employee communications and improper record keeping practices.
For the first time in the last seven years, fines imposed by the FCA have fallen, this year accounting for just £52.8m in 2023, totaling eight penalties. 50% of the fines imposed in 2023 cite serious, or risk of serious, financial crime. This drop-off in penalties comes despite heightened scrutiny following a prominent British bank’s debanking controversy, with the tally at its lowest level since 2016, when the FCA imposed a total value of £22m.
In Germany, BaFin and the FOJ issued 40 fines in 2023, totaling over €8.1m – a fall of 67% year on year. The highest penalty for a single firm was €3m, with the majority (85%) being attributed to reporting delays.
In France, fines issued in 2023 by the AMF reached a total sum of €127.9m, a 34.5% increase in comparison to 2022. Two of these fines cited insider trading, with one penalty imposed on 10 individuals totaling €3.6m. In addition, one fine was due to market manipulation, totaling €1.3m.
In the Netherlands, six fines were levied against six separate firms, including for infringement of product governance rules, notification obligations, and notification of substantial shareholding.
In Singapore, the regulator fined four banks and an insurer in 2023 for breaches of anti-money laundering requirements, alongside another tier-one investment bank for misconduct by its relationship managers. The fines totaled S$7.7m.
It is evident from the SteelEye 2023 Fine Tracker that regulators have their finger on the pulse when it comes to compliance breaches across the financial sector. With huge discrepancies across global regulators for year-on-year penalties, jurisdictions are having to form their own path when it comes to cracking down on violations. It is evident that regulators are enhancing their own technological capabilities to stay abreast in order to filter through extensive amounts of data to allow them to create robust, stable, and secure markets.
Commenting, Matt Smith, CEO and co-founder of SteelEye, said: “Regulators had their foot on the accelerator in 2023, led by the enforcement crackdown from the SEC and CFTC. As highlighted in SteelEye’s 2023 Compliance Health Check report, over 30% of US firms are not monitoring WhatsApp, which has been borne out in notable fines. The remaining holes in compliance practices is why the regulators have cast a wider net in 2023 and imposed tougher penalties – something I believe we can expect to continue over the coming year.”
He continued, “While fines in Europe did not match the levels of those handed down by the SEC and CFTC, the mood music from regulators, such as the FCA, suggests they could join their US counterparts in pursuing and penalizing financial institutions for WhatsApp and other communications record keeping breaches. If this were to take place, we anticipate the fines in Europe to be higher in 2024.”
“The findings suggest watchdogs are maintaining their aggressive attitude to enforcement actions and expanding beyond the large tier-one banks and headline-grabbing fines. With fines a growing threat to firms of all sizes, it’s crucial they invest in the necessary measures – not least looking to harness machine learning and artificial intelligence – to reduce the growing due diligence skills gap and, ultimately, avoid the risk of further imposed penalties in 2024.”
About the SteelEye Fine Tracker:
To create the SteelEye Fine Tracker, SteelEye collected and analyzed all available 2023 fine data from the FCA, SEC, CFTC, BaFin, AMF, AFM and MAS in January 2024:
For access to the raw data, please contact SteelEye by emailing marketing@steel-eye.com
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