Financial misconduct by global banks, since the 2008 financial crisis, has led to the writing-off of $850 billion in profits for the world’s top 50 banks.
As per a research report released on Wednesday, since the 2007-2009 financial crisis, European and U.S. regulators have imposed $342 billion in fines on banks, resulting from violations of anti-money laundering rules and financial misconduct.
As per the report, these fines are expected to touch $400 billion by 2020.
As per Quinlan and Associates, pending cases involve missteps in the US mortgage market in the run-up to the 2008 financial crisis and a fresh penalty on mostly regional banks for anti-money laundering breaches would result in a surge in fines over the next few years.
As per the Hong Kong-based financial services consultancy, these misconducts have struck off $850 billion in profits for the world’s top 50 banks since the 2088 financial crisis in the form of write-downs, trading losses, fines and higher compliance costs.
The bulk of the new regulatory fines, will be against regional banks, including many Chinese banks, that have lagged behind their global peers with regard to complying with money laundering rules.
Among the notables in the regional banks, the Commonwealth Bank of Australia has been battling allegations of systemic breaches of money-laundering and terror-financing laws that could expose it to billions of dollars in fines.
Similarly, Spanish investigators are investigating the European management of the Industrial and Commercial Bank of China as part of a widening probe into alleged laundering through the Chinese banking giant’s Madrid branch.
“Notwithstanding the massive scale of fines that have been handed out to the banking industry to-date, we believe the bloodbath is far from over,” states the report while adding that banks have failed to drive cultural change to deal with misconduct.
As per an analysis done by Barclay Simpson, big global banks are now spending between $900 million to $1.3 billion a year on financial crime compliance.
“Despite the potential scale-back of some recent regulatory reforms in the US, we anticipate that AML, in particular, will remain a key enforcement priority, given ongoing concerns over terrorism across the globe.”