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From tax evasion to terrorism: These are the 10 biggest bank fines of 2020

12/01/2021

Global banks paid out billions of dollars in fines in 2020 - This year banking regulators around the world were kept busy dishing out fines for bad behaviour, ranging from money laundering breaches and facilitation of tax evasion, to close relationships with unsavoury characters.

The majority of the banks hit with the penalties were US-based lenders, who were fined by the country’s regulators.

Authorities in Sweden, Israel and Australia also hit local banks with fines for breaching rules relating to tax evasion, money laundering and terrorism.

Top 10 banking fines of 2020

Goldman Sachs — $5.4bn — 1MDB

Goldman Sachs has been fined more than $5bn by regulators around the world this year for its part in the Malaysian 1MDB scandal, which saw millions looted from the state investment fund by corrupt officials and their accomplices.

Goldman agreed in October to pay $2.9bn to the US Justice Department and other global regulators, on top of the $2.5bn it agreed in July to pay Malaysia’s government.

It also said it would pay $1.4bn to Malaysia in proceeds from assets seized by government authorities related to 1MDB.

The bank also agreed to claw back $174m from current and former senior executives at the bank.

Wells Fargo – $3bn – fake accounts scandal

Wells Fargo agreed in February to pay $3bn to the US Department of Justice and the Securities and Exchange Commission to settle a probe into its long-running fake accounts scandal.

US regulators found that frontline employees at the bank opened strings of fake accounts in the names of existing customers to reach tough sales targets.

“The conduct at the core of today’s settlements — and the past culture that gave rise to it — are reprehensible and wholly inconsistent with the values on which Wells Fargo was built,” CEO Charles Scharf said in a statement.

The bank still has an asset cap of $1.95tn, which was imposed by the Federal Reserve in 2018 as a punishment for the scandal.

JPMorgan — $920m — market manipulation

JPMorgan agreed to pay $920m and admit misconduct tied to manipulation of precious-metals and Treasury markets in September, resolving a probe by US regulators.

The settlement resolves investigations by the Justice Department, Commodity Futures Trading Commission and the Securities and Exchange Commission, according to a CFTC statement.

The fine is the largest ever imposed for spoofing, a type of market manipulation, by the CFTC, the agency said.

Westpac – $920m – money-laundering breaches

The bank agreed to pay the largest fine in Australian corporate history to settle a lawsuit that revealed more than 23m breaches of the country’s terrorism-financing and money laundering rules.

Australia’s second-largest bank said it would pay a $920m fine for breaches that included a failure to spot transfers that may have been connected to child exploitation in Asia.

Westpac also said it had neglected to report more than 19.5m international transfers and said it had failed to keep records of the origin of some of them.

Bank Hapoalim – $874m – tax evasion

Israel’s largest bank agreed an $874m penalty with US authorities as part of a deferred prosecution agreement in April to settle a probe into its facilitation of US tax evasion.

Hapoalim and its Swiss subsidiary admitted to conspiring with US citizens and others to hide more than $7.6bn in secret Swiss and Israeli bank accounts.

Citigroup – $400m – risk management failures

Citi was fined $400m by US regulators in October and ordered to fix its risk management systems in the light of “significant ongoing deficiencies”.

The Federal Reserve criticised Citi for falling short in “various areas of risk management and internal controls” which it said included regulatory reporting, data management and capital planning.

Swedbank – $397m – anti-money laundering deficiencies

Swedish regulators hit Swedbank with a 4bn Swedish krona fine in March after it concluded the bank’s Baltic operation had serious deficiencies in its anti-money laundering measures.

Swedbank had been under investigation by authorities in Sweden, Estonia, Latvia and Lithuania since February 2019 after media reports that potentially suspicious transactions may have passed through its Estonian branch.

JPMorgan – $250m – weak internal audit practices

JPMorgan was fined $250m in November by US regulators over deficiencies in internal controls and internal audit practices.

JPMorgan Chase Bank entered into a resolution with the Office of the Comptroller of the Currency to pay the civil penalty, the company said in a regulatory filing.

For several years, the bank “maintained a weak management and control framework for its fiduciary activities and had an insufficient audit programme for, and inadequate internal controls over, those activities,” the OCC said in its order. “Among other things, the bank had deficient risk management practices and an insufficient framework for avoiding conflicts of interest.”

Deutsche Bank – $150m – Jeffrey Epstein relationship

Deutsche Bank was fined $150m by the New York’s Department of Financial Services in July for a series of compliance failures related to its years-long relationship with the late Jeffrey Epstein, who killed himself while awaiting trial on sex-trafficking charges.

The German lender was accused of processing millions of dollars in payments for the registered sex offender, including payments to people alleged to have been Epstein’s co-conspirators as well as $6m in payments to “dozens” of law firms for their legal expenses.

Scotiabank – $127m – price manipulation

The Canadian bank was fined $127m by US regulators in August to settle civil and criminal allegations in connection with its role in what authorities called a massive price-manipulation scheme.

The wrongdoing stemmed from thousands of manipulative orders for precious metals futures contracts placed on US exchanges by four traders at the bank, the agencies said.

The settlements also resolved claims by the US Commodity Futures Trading Commission (CFTC) that Scotiabank made false statements and incomplete disclosures about alleged price manipulation by its traders in connection with a previous investigation by the regulator.

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