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Looking Back on 2009: Recession, Sanctions Penalties, Tax Evasion Were the Big Industry Concerns
printU.S. regulators focus on money laundering took a back seat to recession concerns in 2009, with the Federal Deposit Insurance Corporation closing down 144 banks. Speaking at industry conferences, regulators expressed concern that some banks were cutting back on anti-money laundering (AML) programs and procedures, even as they acknowledged their agencies were preoccupied with concerns about safety and soundness issues. More Still, bank closings and numerous enforcement actions for capital requirement and credit risk violations didn't preclude law enforcement and regulatory officials from pursuing banks for violating U.S. and international sanctions in 2009. And, they also stepped up pressure on...
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In the messy art of prognostication, everything is overly easy and nothing exact, not even compliance expectations. But one thing government officials and financial industry representatives seem certain of: 2015 will prove just as challenging as the past year for AML professionals.
With plenty of convincing reasons, representatives of the law enforcement and compliance industry say the coming year is fraught with serious challenges.
Relative to the year before, the anti-money laundering (AML) compliance industry drew few headlines over the past 12 months, and yet no one would tell you their job got any easier.
Tax investigations, political turmoil and economic sanctions were among the biggest challenges faced by the compliance departments of financial institutions in 2011, say bank officials and industry experts.
In the wake of the recession, compliance departments are grappling with implementing more regulations with fewer resources, a former bank regulator says.
The number of annual federal banking fines for anti-money laundering violations rose by nearly fourfold in 2010, while the total dollar amount of the monetary penalties rose to over $660 million, according to Moneylaundering.com/ComplianceAdvantage data.
The new year won't be any easier on compliance officials at banks and money services businesses, and could get much harder depending on how U.S. officials implement new and proposed regulations, according to industry leaders.
Regulatory pressure grew on financial institutions in 2010 though few compliance departments saw an increase in budgets or resources in the wake of an 18-month recession, say industry professionals.
The overall number of regulatory enforcement actions against banks jumped 52 percent in the first half of 2010 in comparison to the number issued in the first half of 2009.
We never said compliance professionals had it easy, and 2010 doesn't look to be a year when things will be any better for the anti-money laundering and counterterrorism financing industry.
Banking regulators issued 23 enforcement actions in the first half of 2009, slightly more than for the same period in 2008, according to Inform data.
New Year's Eve may have come and gone and all of the post-celebration headaches faded, but financial institutions are going to need many more months to recover from 2008.
Twenty-five banks failed in 2008, including Seattle-based Washington Mutual, the largest bank to fail in U.S. history. With less resources and with regulators focused on credit markets and capital requirements, compliance officers faced a whole new set of regulatory challenges.
Regulators spent less face time addressing AML concerns as the lion's share of regulatory attention was devoted to subprime lending standards and the broader credit crisis. But, when financial regulators and the Justice Department weighed in, they did so heavily, assessing record penalties.
Now that the confetti has settled and the kazoos have been packed away for next year's parties, anti-money laundering compliance officers consider what lies ahead in 2008.