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Anti-money laundering continues to dominate global financial crime regulation, but enforcement activity appears to be slowing as attention turns from banks to other financial institutions.
Such were the findings come from Kroll’s annual Global Enforcement Review 2022.
Anti-money laundering continues to dominate global financial crime regulation, but enforcement activity appears to be slowing as attention turns from banks to other financial institutions.
Such were the findings come from Kroll’s annual Global Enforcement Review 2022.
It found that, globally, the value of fines issued to financial services firms for AML failings reached a new recent low of $1.6bn in 2021, compared to $2.2 bn in 2020. That was just half of the peak figure of $3.3bn in 2018.
According to Kroll, more attention now appears to be being focused on cryptocurrency, with US regulators imposing fines for AML-related infringements on crypto businesses.
One notable case saw a cryptocurrency exchange fined $100m by FinCEN.
Malin Nilsson, Managing Director, Financial Services Compliance and Regulation in Kroll’s Jersey office said: “In the Western world, it is almost impossible to find a major, global bank that has not been sanctioned for AML or other financial crime failings in recent years.
“This is reflective of the predominant focus global regulators have placed on ensuring AML measures are functioning robustly at the world’s major financial services institutions.”
“Now that AML-related concerns and failings have resulted in many large banks being sanctioned, regulators are beginning to pay increased attention to other areas of financial services.”
Pictured: Malin Nilsson from Kroll’s Jersey office.
Reflecting on the rise of cryptocurrency and the potential risks, Charlie Sorensen, Senior Associate at Baker and Partners, told Express that virtual currencies’ “appeal lies in their anonymity, ease of transaction (particularly cross border) and absence of government oversight.”
He predicted that, “as investment in these assets becomes more common, levels of fraud will increase.”
“Such is the potential for harm that in October 2020 the UK Financial Conduct Authority (FCA) banned the sale of derivatives and exchange-traded notes related to certain types of cryptoassets to retail consumers citing, amongst other things, the prevalence of cyber theft,” Advocate Sorensen continued.
“The rapid increase in fraud has seen a corresponding increase in asset recovery ligation. While the law cannot move as fast as the technology, the courts in England have been willing to innovate to assist victims – for example by granting worldwide freezing orders and disclosure orders against “persons unknown” in order to trace and recover stolen assets.”
Pictured: Advocate Charlie Sorensen reflected on cryptocurrency and its risks.
Turning to how such cases may be handled in Jersey, he added: “The Jersey courts have a long history of providing support to victims where the Island’s financial services have been involved in fraud and will no doubt continue this proactive approach in cases involving cryptoassets
“ It is highly likely that developments in England, as well as other financial centres such as the Cayman and British Virgin Islands, will provide useful guidance for the Jersey courts as cryptoassets become an increasingly common feature of civil litigation.
“In terms of criminal enforcement, Jersey law provides extensive powers for the authorities to restrain assets suspected to be the proceeds of crime (in some instances more extensive than are available in the UK). There are also statutory regimes for both conviction based and non-conviction based asset forfeiture. In the UK there have been seizures in excess of £100m.
“Whether similar actions take place in Jersey will be case specific. The legal architecture is in place and, as holdings of cryptoassets through Jersey increase, so does the likelihood of enforcement action – particularly in light of the changes to the sanctions regime following the invasion of Ukraine.”
Fraud hits £300k in months amid scammers' new crypto focus
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