Crypto and fintech groups faced unprecedented fines in 2023

Tuesday 9 January 2024 13:17 CET | News

Global authorities have issued fines totalling USD 5.8 billion to crypto and fintech groups in 2023 in an effort to tackle illicit money flows.


According to the Financial Times, in the previous year, cryptocurrency and fintech entities faced unprecedented penalties, surpassing the total fines imposed on the entire traditional financial system. Global regulatory bodies intensified efforts to combat illicit financial activities in these evolving sectors. 

The same source reveals that these penalties primarily came from deficiencies in customer verification processes, deficiencies in anti-money laundering controls, and failures to adhere to sanctions and other financial crime regulations. Compliance software provider Fenergo compiled the data, indicating that total fines related to money laundering and financial crimes increased by over 30% to reach USD 6.6 billion, although remaining notably below the peak of USD 11.3 billion recorded in 2015. 

The yearly figures were influenced by substantial fines, such as the one imposed on Binance in November 2023. Cryptocurrency firms faced a significant surge in fines, experiencing 11 penalties compared to an average of fewer than two per year over the preceding five years. Similarly, payments providers encountered 27 fines, which represents a substantial increase from their average of about five per year between 2018 and 2022.


 Global authorities have issued fines totalling USD 5.8 billion to crypto and fintech groups in 2023 in an effort to tackle illicit money flows.


Regulators and officials weighed in on the subject

Regulators in various jurisdictions have been urging payments firms to improve their practices, with the UK’s Financial Conduct Authority deeming the risks posed by the sector as 'unacceptable' in the previous year. Officials from Fenergo cited by the Financial Times suggested that fines against traditional financial institutions might rise again as suspicious patterns emerge from dealings with Russian entities. 

The cumulative fines of USD 5.8 billion, including a USD 4.3 billion penalty against Binance, characterised as a warning by US prosecutors, significantly exceeded the USD 835 million paid by traditional financial services groups in the same period. Representatives from Better Markets, an advocacy group for tighter regulation, attributed these figures to pervasive fraud and criminality in the crypto space, emphasising the necessity of regulatory intervention to curb egregious conduct and deter further misconduct. 

Moreover, the Financial Times talked to the former head of the Financial Action Task Force, who expressed concerns about the lack of global regulatory alignment for crypto firms in most jurisdictions. He anticipated further fines in this area, highlighting the need for proper oversight and regulation as cryptocurrency risks continue to escalate, providing opportunities for exploitation by criminals.

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Keywords: cryptocurrency, fintech, regulation, compliance, AML
Categories: DeFi & Crypto & Web3
Companies: Department of Justice, FCA
Countries: World
This article is part of category

DeFi & Crypto & Web3

Department of Justice



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