Surging large fines for organisations signal regulators’ changing approach

Surging large fines for organisations signal regulators' changing approach

A recent report from Moody’s Analytics Grid has shed light on the changing landscape of regulatory fines across the globe, showing a dramatic increase in large fines for organisations in the past year.

The study revealed that businesses faced large fines, defined as more than $10,000, at more than double the rate of small fines, which are classified as less than $10,000.

Analysing data spanning five years, from January 1, 2018, to April 21, 2023, Moody’s Analytics found a consistent uptick in the number of companies slapped with large fines. During this period, 60% of organisations were hit with such penalties, while smaller fines accounted for 40%. The rate of large fines has been climbing steadily since 2018, while the occurrence of smaller fines has been declining over the past two years.

Remarkably, the rise in large fines in 2023 is already outpacing the previous year. Moody’s Grid data shows that by April 21, 2023, the total number of organisations receiving large fines had already surpassed the total for the entirety of 2022.

Katherine Conroy, assistant director and product strategist at Moody’s Analytics, commented on the findings. “[Our data shows that[ the level of large fines (above $10k) against organisations for non-compliance has been growing at an increasing rate over the past five years, while the rate of small fines (below $10k) has been decreasing for the last two years,” she said. According to Conroy, this trend is not confined to one particular jurisdiction but is noticeable across the globe, indicating a shift in regulatory strategy from mere compliance to impacting business measures with wider community implications.

“Compliance screening and ongoing monitoring that synthesise sanctions, beneficial ownership, financial crimes as well as predicate crimes and associative risks ensure not only robust due diligence to protect businesses from larger fines, but also action the growing expectations of global businesses toward responsible, sustainable corporate strategies,” Conroy added.

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