In recent years, United States financial regulators have established themselves as global leaders in enforcement. In 2022, they imposed $3bn in fines, nearly three quarters of the world’s $4.2bn total. 2023 continued this trend, with US financial institutions paying 83% ($157.26m) of total penalty dollars, a stark contrast to their 10% share in global regulatory violations.
November 2023 saw a landmark event: FinCEN and OFAC fined a leading crypto firm $4.3bn for sanctions violations, the largest penalty in both organizations’ history. The SEC and CFTC also imposed fines over $1bn, signaling a rigorous regulatory environment as we enter 2024.
Client lifecycle management platform Fenergo recently delved into the US regulatory priorities of 2023 and beyond.
A Regulatory Reckoning: What’s in Store for Crypto, AML, and ESG
US authorities are intensifying their focus on cryptocurrency amid global conflicts, scrutinizing its potential to bypass financial sanctions. Despite its “Wild West” reputation, SEC Chairman Gary Gensler insists that crypto markets are not inherently at odds with securities laws, suggesting compliance issues rather than technological ones.
Crypto-related AML fines hit $193m in 2022, a 92% increase from 2021, with the US issuing all but one of these fines. This focus on crypto is not new; in 2022, the White House released its first framework for digital assets development.
The SEC
The SEC’s $5bn in fines in 2023, predominantly for AML breaches in the crypto sector, indicates its close scrutiny. Its 2024 priorities include increased fieldwork and focus on AML compliance, though ESG is notably absent.
FinCEN
FinCEN’s Spring 2023 Rulemaking Agenda highlights key focus areas: beneficial ownership reporting, SARs information sharing, and implementing AMLA 2020’s section 6314 and the Whistleblower Improvement Act.
Preparing for 2024
Financial institutions must stay abreast of emerging technologies and digitalize compliance processes to meet evolving regulations and combat financial crime. The integration of crypto into the traditional financial ecosystem underscores the need for effective KYC practices and a collaborative approach to fighting financial crime.
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