UK Regulator Issues Record Fines as Financial Crime Surges

The UK’s financial regulator issued fines of £313m ($374m) in the 2021-22 financial year, a 65% increase on the previous 12 months, as illicit behavior soared.

The Financial Conduct Authority (FCA) said it also began prosecutions last year alleging insider dealing, investment fraud and money laundering. One landmark case of money laundering during the period resulted in the first ever prosecution of a UK bank, after NatWest was fined over £264m ($316m).

The regulator claimed it currently has 71 investigations open into insider dealing cases, as it continues to promote “clean and fair markets.”

It also issued over 1400 alerts on its website about firms or individuals last year, an 18% increase from the 1196 alerts issued in 2020, and opened 842 enquiry cases relating to reports of potentially unauthorized businesses.

To help its regulatory efforts, the FCA said it had invested £120m over the past three years in “data capabilities” enabling officers to more accurately assess risk.

Whistleblowing reports are another key source of information. Between April 2021 and March 2022, the regulator received and assessed over 1000 such reports, featuring more than 2100 separate allegations.

Henry Balani, global head of industry and regulatory affairs for Encompass Corporation, welcomed the FCA’s robust stance on financial crime.

“As enforcement continues, and in light of these increasing fines, financial institutions must continue to take their responsibilities when it comes to financial crime seriously, which means proactively addressing how they deal with it by following regulatory guidelines and utilizing the best in RegTech solutions to improve compliance processes and reporting measures,” he noted.

However, although the figure for fines issued in the last financial year represents a significant increase from the £189.8m levied in 2020-21, it’s still a drop in the ocean given the size of financial crime.

Investment fraud cases reported to the FBI cost victims nearly $1.5bn last year, while money laundering is estimated at 2-4% of global GDP, which amounts to around $4tn or more today.