Navigating the regulatory minefield: Record fines highlight 2023’s compliance challenges

Navigating the regulatory minefield: Record fines highlight 2023's compliance challenges

In 2023, the global regulatory landscape unveiled a startling revelation as fines imposed by authorities exceeded a colossal $10.5bn. This figure not only reflects the stringent enforcement actions but also spotlights the emerging areas of regulatory scrutiny.

This finding came from the latest quarterly enforcement data report for 2023 by Corlytics, a regulatory risk intelligence platform.

The EU, in its steadfast commitment to data protection, imposed fines nearing €2.1bn for breaches of the General Data Protection Regulation (GDPR). Notably, the Irish Data Protection Commission (DPC) was at the forefront, issuing two of the most substantial fines of the year, both targeting Meta for significant data breaches. These fines, particularly the groundbreaking 2023 GDPR penalty exceeding €1.2bn ($1.3bn), signify the rigorous stance European authorities are taking against data protection violations.

The realm of crypto and digital assets was not spared from the regulators’ watchful eyes. Binance, the world’s largest crypto exchange, found itself facing a monumental $4bn fine from the U.S. authorities, including the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC). This penalty, a consequence of breaching the Bank Secrecy Act, marked not only the heftiest fine of the year but also a significant milestone, as the crypto and digital asset markets accounted for two of the top twelve highest fines.

Geographically, the distribution of fines was notably uneven. The Americas led the pack, with the number of fines being fourteen times higher than in the APAC and four times that in Europe. In contrast, the Financial Conduct Authority (FCA) in the UK had a comparatively quiet year, imposing fines totalling £52.8m ($66.7m).

As 2023 progressed, global regulators broke their silence, imposing over 80% of the total fines in the latter half of the year. US regulators, in particular, stood out, commanding the top positions in all categories of fines. Both the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) were active, frequently issuing fines. FinCen and the Department of Justice (DoJ) topped the list in terms of the amounts, with enforcement fines reaching $3.4bn and $1.4bn, respectively.

The year underscored that financial crime, data protection, and governance were the primary areas of regulatory risk in financial services, attracting the highest penalties. An astonishing $6.7bn of the total fines were imposed for financial crime, predominantly related to money laundering and terrorist financing.

Corlytics’ team of experts meticulously analyses regulatory data, providing a forensic insight into global enforcement actions. Its services, tailored to meet the modern-day needs for tracking regulatory activity, include quarterly updates of global enforcement analytics. This data is meticulously charted by amount, year, jurisdiction, regulatory category, and control failings.

For those keen on obtaining a detailed enforcement chart, download a copy here.

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Copyright © 2023 FinTech Global

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