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15 Biggest Compliance Fines ($1Billion and Above)

Osman Husain 11/30/23 12:00 PM
biggest compliance fines

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Just as in any other industry, the financial industry has its fair share of questionable behavior. Thankfully, regulatory oversight — and accompanying fines for non-compliance, violations, and even fraud — exist to keep financial institutions in line. 

And the number of fines has reached some staggering levels. Let’s dive into the biggest compliance violations & fines in the past decade. 

 

Bank Fines: The 15 Biggest Compliance Fines

Occasionally, some banks get a little too zealous about padding their accounting sheets. When this happens, it can fall under the category of a bank scheme. From outright fraud to behaviors that are far from transparent or ethical, these are some of the biggest regulatory fines in recent history that have been levied against financial institutions domestic and foreign.

We’ve listed the bank fines from smallest to largest, along with a brief overview of what offending behavior caused a bank to get caught with its hand in the proverbial cookie jar.

Interested in specific instances where banks were fined for failing to detect money laundering activities? Check out our list of the biggest anti-money laundering fines

 

Binance Violates the Banking Secrecy Act — $4.3 Billion

Cryptocurrency exchange firm Binance had been under U.S. Justice Department investigation for several months, and finally pleaded guilty to an ineffective anti-money laundering program.

As part of its guilty plea, Binance agreed to pay U.S. regulators a sum of $4.3 billion, with founder Changpeng Zhao (CZ) stepping down from his post as CEO. 

As part of the settlement, Binance will also be subject to a third-party monitor, directed by the U.S. Treasury's Financial Crimes Enforcement Network. The monitor will examine Binance's accounts and transactions, certifying that the company complies with U.S. federal regulations. 

Part of the allegations on Binance were that it had willingly facilitated transactions from sanctioned groups, including ransomware hackers, countries like North Korea and Iran, as well as terror groups. The company admitted to mistakes and said it would continue to work with regulators to correct its path

The Binance fine is the largest penalty in the history of the U.S. Treasury Department. 

 

The AML Program That Wasn’t — $1.256 Billion

AML is short for anti-money laundering program. In short, banks are expected to uphold business practices and regulations that don’t support financial crimes. However, in 2012, the U.S. Department of Justice (DoJ) found that HSBC Bank USA had an AML program that was nothing more than for show

Instead, the bank tended to look the other way regarding its foreign account holders and associated activities. HSBC was found in violation of the Banking Secrecy Act, Trading with the Enemy Act (TWEA), and the International Emergency Economic Powers Act (IEEPA) after evidence was uncovered of questionable transactions for clients in sanctioned nations like Iran, Cuba, Libya, Sudan, and Burma. 

HSBC was found liable for aiding in the laundering of at least $881 million in drug-related finances over several years, leading to the $1.256 billion fine. 

 

The MAN Group’s Poor Trading Oversight — $1.312 Billion

Hedge funds aren’t immune to oversight from financial regulators either. The MAN Group is a storied hedge fund with a history that began in 1783 and is one of the largest publicly traded funds in the world. The brokerage division emerged as a separate entity known as MF Global in 2007, and that’s when the problems began. 

To summarize, the firm was constantly found in violation of trading regulations, poor debt provisions, and even difficulty with maintaining liquidity to cover bad calls. While the company went bankrupt in 2011, the investigations continued into the company and its core directors — including the CEO John Corzine.

The Commodity Futures Trading Commission (CFTC) was the investigating party. While the company was ordered to pay $1.212 billion to customers from the Federal Court in New York, and a $100 million penalty with the CFTC, individual directors also paid heavy fines. Corzine settled with the CFTC for $5 million and agreed to a lifetime ban from CFTC markets. 

 

JPMorgan Chase & the Biggest Ponzi Scheme — $1.7 Billion

You can’t have a “best of the worst” financial fines list without including Bernie Madoff. He’s known for having pulled off the largest Ponzi scheme in history — defrauding his customers while grossing an estimated $65 billion over several decades. In 2009, when the markets were still reeling from the bursting housing bubble, Madoff was found guilty of fraud and sentenced to 150 years in prison.

Meanwhile, contributing banking institutions like JPMorgan Chase were also found liable because of poor oversight that allowed Madoff to swindle his victims with impunity. To avoid prosecution, the multinational bank agreed to pay $1.7 billion in restitution to Madoff’s victims. 

 

SAC Capital Advisors & Insider Trading — $1.8 Billion

Yet another hedge fund makes the list with one of the more considerable fines levied for insider trading. Insider trading is when an individual or institution gets advanced information about a publicly traded stock — thereby giving them an unfair advantage over other consumer or commercial traders. SAC Capital Advisors had been under investigation by the Securities and Exchange Commission (SEC) for years but things came to a head in 2013. 

The New York firm was found guilty of not just insider trading, but wire fraud and securities fraud. Along with a hefty $1.8 billion fine, several individual traders found themselves headed to jail. To date, this is the largest fine for insider trading in U.S. history. Of that amount, half was set aside for criminal fines and the other half for civil fines related to money laundering and forfeiture actions. Another result was the company and its subsidiaries being barred from ever taking any future outside investor funds. 

 

Credit Suisse & Tax Fraud — $2.5 Billion

Wanting to reduce your tax liability is normal. Engaging in deceit to do so is a great way to either see the inside of a jail cell or pay hefty fines. Credit Suisse was under investigation for years because of allegations regarding unscrupulous accounting to aid U.S. customers in falsifying income tax returns and accompanying documents that were submitted to the IRS. 

However, the bank’s questionable arithmetic wasn’t just limited to the U.S. Taxation agencies in other countries including Brazil and Germany also had their eyes on Credit Suisse. In the U.S., the bank was ordered to pay $1.8 billion. However, along with additional fines, the total amounts to $2.5 billion

 

LIBOR Price-Fixing Scandal — $2.5 Billion

Price fixing is never a good idea, but sometimes even banks need to be reminded that monopolies are illegal. The LIBOR scandal involves criminal charges regarding a foreign currency exchange that involves several major multinational banks between 2007 and 2013. Citicorp, Barclays PLC, JPMorgan Chase & Co, The Royal Bank of Scotland plc, and UBS AG all pled guilty to felony charges for each member’s involvement in the scheme. 

Simply put, forex (foreign exchange) traders at the banks worked in tandem to manipulate currency values between the U.S. dollar and the European euro for financial gain. As if this isn’t enough, the traders called themselves “The Cartel” and even initiated private chat rooms and codes to influence exchange rates. 

Typically, the exchange rates were edited twice daily, at 1:15 PM for the European Central Bank fix, and at 4:00 PM for the World Markets/Reuters fix. The traders would agree to only buy and sell at specific times, ensuring minimal losses for participating member banks. As with many other entries on this list, that $2.5 billion fine isn’t the final word for the exposed institutions.

 

Wells Fargo’s Phantom Accounts — $3 Billion

One of the most recent offenders hits close to home with the American banking corporation, Wells Fargo. Unlike many of the other entries on this list, Wells Fargo gets a mention because the firm repeatedly engaged in illegal activity that’s said to have harmed over 16 million consumer accounts. 

Highlights from the financial company’s misdeeds include opening up phantom banking and credit accounts and banking services under real customer names without consent. The reason for such misdeeds? The bank demanded high sales quotas from its employees. As a mea culpa, the bank agreed to a $3 billion settlement to the DoJ. However, the Consumer Financial Protection Bureau (CFPB) is still investigating other allegations against Wells Fargo so that figure could increase. 



Wells Fargo & Rampant Mismanagement — $3.7 Billion

As you can see, several banks on this list don’t ever seem to learn a lesson, becoming repeat offenders. This time, Wells Fargo returns over additional claims of mismanagement and consumer abuses. The CFPB settled with the bank for $3.7 billion dollars. Allegations included that customer payments were misapplied for mortgages and auto loans. 

Meanwhile, other consumers were hit with incorrect interest charges. In severe cases, people lost their homes or cars as a result of the banks errors. Note that this settlement includes a $1.7 billion civil penalty and over $2 billion that will be given directly to customers affected by the bank’s misdeeds. 

 

Credit Suisse’s Toxic Asset Sell-Off — $5.3 Billion

Balancing your books is one thing. But knowing that your business practices are going to contribute to a massive economic crisis — and trying to stave off the damage before it happens — is criminal. Several banks found themselves on the wrong side of the law after the Subprime Mortgage Crisis (SMC), including Credit Suisse. 

Institutions determined to influence activities that ushered in the Great Depression significantly, later learned in the following decade that those behaviors wouldn’t go unpunished. Credit Suisse was ordered to settle in the amount of $5.3 billion for selling toxic debts before the financial crisis took hold. Roughly $2.48 billion of this figure was paid as a civil penalty with $2.1 billion used for consumer relief. 

However, this is just one part of the fallout from the SMC as almost every major bank across the U.S. and many multinationals also faced steep fines for poor oversight and intentionally providing loans to unsuitable customers. 

 

Goldman Sachs & the Pilfered Malaysian Coffers — $5.4 Billion

No one likes a thief. But if you steal from government funds, don’t be surprised when the long arm of the law finds you. Goldman Sachs found itself in hot water in 2020 for participating in the Malaysian 1MDB scandal. The event refers to millions that were stolen from the state investment fund. 

While the masterminds behind the scandal were local Malaysian government officials and accomplices, Goldman Sachs was accused of facilitating money laundering to divert money from the state fund. To avoid further investigation and legal action, the bank agreed to pay a total of $5.4 billion to multiple global regulators including the DoJ in the U.S. Additionally, the bank paid another $1.4 billion to Malaysia as part of a restitution settlement. 

 

Deutsche Bank & SMC — $7.2 Billion 

Shoddy business practices that prioritize profit over sound actions will always catch up with you in the end. Deutsche Bank, a massive multinational bank headquartered in Germany, can attest to this as the financial institution was slapped with a $7.2 billion fine in 2016 for attempting to offload toxic assets ahead of the housing crash. Of that figure, roughly $4.1 billion is being set aside for consumer relief and loan modifications that will be spread out over the next five years. 

 

BNP Paribas’ Money Laundering — $8.973 Billion

Smart individuals and businesses know that trying to scheme around anti-terrorism laws is a bad idea. However, BNP Paribas, a French-based bank, apparently failed to get that memo. The bank was found in violation of both the IEEPA and TWEA in 2015 for processing billions of transactions through the U.S. financial system on behalf of sanctioned nations. 

BNP Paribas was accused of “deliberately disregarding the law” according to the DoJ, working to cover its tracks in the process, while helping to support terrorism in countries such as Sudan, Iran, and Cuba. The bank was required to fork over $8.833 billion to the U.S. government as well as pay $140 million in fines, which gets you the $8.973 billion total. 

 

JPMorgan Chase & SMC — $13 Billion

The subprime mortgage crisis had a lot of dirty banking hands in the cookie jar. So, while many banks faced fines, some were slapped with significantly higher ones. JPMorgan Chase found itself in the hot seat both for federal and civil claims because it participated in passing out poorly vetted mortgages to consumers. The bank agreed to settle for $13 billion in 2013 with the DoJ

However, this bank wasn’t alone. You may remember that JPMorgan faced its day of reckoning along with the investment bank Bear Stearns and Washington Mutual. However, the two latter firms no longer exist. Both went defunct in 2008, with JPMorgan Chase opting to purchase them — which raised several red flags. Washington Mutual was absorbed into the Chase Bank brand while Bear Stearns was acquired under the investments division.  

 

Bank of America & SMC — $30.6 Billion

If there’s a biggest loser for “most fines paid” from the SMC scandal, it’s Bank of America (BoA). Yes, several banks paid a lot of money for their involvement in activities that destabilized the global economy. But, BoA has faced the most fines during this period. BoA found itself agreeing to multiple settlements over the past decade to atone for its questionable practices. 

The bank paid $11 billion as part of the $25 billion agreement with the five largest mortgage servicers in the U.S. This was meant to address previous foreclosure and loan servicing abuses. But then, the bank paid $10.3 billion to Fannie Mae as part of a settlement in 2013. Again, in 2014, BoA paid $9.3 billion in a settlement with the Federal Housing Finance Agency. 

 

Compliance Software to Keep You Protected 

This “best of the worst” list highlights a critical reality: non-compliance can cost you dearly.

While banks and financial institutions have an array of compliance needs to take care of and large departments to oversee this requirement — software can also help close the gap.

Our list of the best compliance software highlights multiple vendors that can assist organizations of all sizes. Check it out below.

👉 The Best Compliance Software in 2023

Osman Husain

Osman is the content lead at Enzuzo. He has a background in data privacy management via a two-year role at ExpressVPN and extensive freelance work with cybersecurity and blockchain companies. Osman also holds an MBA from the Toronto Metropolitan University.