Mon. Jan 18th, 2021

Planet Compliance

Innovation & Regulation in Finance

The 5 Biggest Compliance Fines of 2020

3 min read

Just on the back of the decade of the highest enforcement actions against financial institutions, the question always was: Would the trend continue? Well, looking at the compliance fines that have been issued by the authorities in the last twelve months, it has become clear that this dog doesn’t only bark, it bites! Again, billions of dollars have been paid for banks’ wrongdoings and deficiencies in oversight and control. Here is an overview of the 5 Biggest Compliance Fines of 2020:

5th place: TD Bank and its illegal overdraft practices

The Canadian based TD Bank charged consumers overdraft fees for ATM and one-time debit card transactions without obtaining their affirmative consent. The Consumer Financial Protection Bureau came to a settlement with TD Bank, which meant it was to part with an estimated $97 million in restitution to more than 1.4 million consumers and to pay a civil money penalty of $25 million for a total of $122 million.

4th place: Deutsche Bank and its involvement in the Epstein case

The Jeffrey Epstein case caused a lot of turmoil, but people often forget about the compliance fines that are part of it. When the DFS made Deutsche Bank pay $150 million in penalties as part of a consent order, it was the first enforcement action by a regulator against a financial institution for its involvement. In this case it’s for processing hundreds of transactions totaling millions of dollars that should have prompted additional scrutiny in light of Mr. Epstein’s history, but unfortunately didn’t.

3rd place: Santander’s predatory loan practices

When a coalition of 34 attorneys general announced a settlement with Santander Consumer USA Inc., for $550 million in relief for consumers plus millions more expected in additional deficiency waivers, we knew it must have been bad, but reading the full story is worse, because Santander used predatory loan practices and “profited by approving high-cost loans to disadvantaged auto buyers who were doomed from the start“.

2nd place: Bank Hapoalim and US Tax Evasion

The U.S. takes tax evasion seriously and to make a point just look at the combined penalty for Bank Hapoalim for more than a billion dollars for having knowingly facilitated U.S. clients’ evasion of state and federal taxes through its conduct of an illegal cross-border banking business. It is made of $875 million for a guilty plea with the Justice Department and $220 million following the investigation by the New York State DFS.

1st place: A Bad Year for Wells Fargo

Wells Fargo actually should have two entries in the top 5. First, when the SEC charged it $500 million for misleading investors about the success of its core business strategy. Secondly, when it agreed with the Department of Justice to pay $3 billion to resolve their potential criminal and civil liability stemming pressuring employees to meet unrealistic sales goals that led thousands of employees to provide millions of accounts or products to customers under false pretenses or without consent, often by creating false records or misusing customers’ identities. A bad year indeed.

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