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Avoiding the Cost of Compliance Failure: 9 Notable AML Penalties and Lessons for B2B Firms

22nd April 2025

Visual representation of the importance of advanced AML systems for B2B firms, emphasizing real-time monitoring and proactive risk detection

Avoiding the Cost of Compliance Failure: 9 Notable AML Penalties and Lessons for B2B Firms

Money laundering is a serious regulatory and financial offence — and in B2B contexts, the risks are magnified. Engaging with a high-risk counterparty, whether knowingly or not, can lead to hefty fines and lasting reputational damage that can shatter future business relationships. These breaches may be deliberate, but often they result from failed compliance due to poor systems, lack of oversight, or outdated processes that don’t keep up with today’s complex regulatory environment. 

visual illustrating the need for advanced AML compliance in global B2B operations

While RegTech and AML solutions can come with upfront costs — especially depending on the size of the business and resources available — the financial, operational, and reputational fallout from non-compliance is far more costly and can take years to recover from. 

The UK’s AML watchdog, the Financial Conduct Authority (FCA), takes these breaches seriously. Since 2013, it has issued over £3.28bn in fines, with a record £1.47bn handed out in 2014 alone. These figures aren’t just warnings — they’re proof that regulators expect firms to have the right systems in place to screen, monitor, and manage their counterparties effectively. 

In this article, we’ll explore some of the most significant AML penalties across financial and insurance sectors, and how RegTech is helping firms mitigate counterparty risk through real-time sanctions checks, PEPs screening, and adverse media monitoring. 

The negative impact of AML violations, including fines, reputational damage, and the role of monitoring and sanctions screening
The Role of Penalties and Fines for Breaching AML Laws in Insurance

The importance of AML compliance cannot be stressed enough and is mandatory in order to avoid monetary, legal and reputational consequences. However, fines imposed by the FCA and other regulators in both the UK and the rest of the world are designed to safeguard the entirety of the financial system, but also to protect both commercial and individual customers from all sorts of financial crimes.

That’s when sanctions lists and access to verified businesses come in handy – these resources allow insurance firms and financial institutions to oversee who they can trade with and who they need to avoid to not end up being sanctioned as well.

AML penalties can be substantial, often reaching millions or even billions of dollars, depending on the severity of the violation. Such sanctions not only impact the financial health of organisations but also tarnish their reputations in an increasingly scrutinised industry. In worst case scenarios, responsible persons can be imprisoned for some months to up to 14 years.

The enforcement of AML penalties is essential in promoting accountability among financial service providers. By imposing strict fines for non-compliance, regulatory bodies aim to encourage organisations to adopt robust AML processes that effectively identify and mitigate risks associated with illicit financial activities. This proactive approach helps create a safer economic environment by reducing opportunities for money laundering and related crimes.

Moreover, these penalties highlight the importance of vigilance within insurers. They compel companies to invest in training programmes, compliance technology, and thorough monitoring systems that can detect suspicious transactions before they escalate into larger issues.

List of AML Compliance Regulations and Penalties in the UK
AML Compliance Regulations and Penalties in the UK

1. The Terrorism Act:
Introduced in 2000, the Terrorism Act focuses on combating terrorist financing and the movement of funds to support terrorism-related activities. Under this law, it’s a criminal offence to raise, possess, or use funds for terrorism purposes, or to be involved in the transfer or handling of funds that could potentially be used for such activities. Financial institutions are legally required to monitor customer transactions for suspicious activity that may indicate terrorist financing and report these to the National Crime Agency (NCA).

2. The Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (MLR 2017):
The MLR 2017 implements the EU’s Fourth Money Laundering Directive into UK law and serves as a key regulation for preventing money laundering and terrorist financing. It outlines the obligations that businesses in regulated sectors must follow to mitigate financial crime risks. Central to MLR 2017 are Customer Due Diligence (CDD) measures, which require firms to verify the identity of their customers before establishing business relationships or conducting transactions. For higher-risk situations, such as dealings with politically exposed persons (PEPs), businesses must apply Enhanced Due Diligence (EDD), including stricter identity checks and monitoring ongoing transactions. Firms are also required to conduct risk assessments, implement comprehensive AML policies and controls and provide staff training to ensure compliance.

3. Proceeds of Crime Act 2002 (POCA):
This is one most significant pieces of legislation in the fight against money laundering and financial crime in the UK. POCA provides the legal framework for identifying, recovering, and confiscating proceeds generated from criminal activities. It defines key money laundering offences, such as concealing, disguising, converting, or transferring criminal property, and criminalises actions involving the handling of property acquired through unlawful means. Under POCA, individuals working in regulated sectors are legally obligated to report suspicious financial activity to the NCA by filing a Suspicious Activity Report (SAR).

4. The Financial Services and Market Act:
The Financial Services and Markets Act 2000 (FSMA 2000) provides the framework for regulating UK financial services, aiming to build public confidence. It was updated by the 2012 Act, which created the PRA and FCA as regulators. The Financial Services and Markets Act 2023 (FSMA 2023), which took total effect on 29th August 2023,  replaces EU laws with UK-specific rules, implemented by independent regulators under a government framework, to create a more tailored regulatory system.

9 Most Prominent AML Penalties and Fines in the Insurance and Financial Services Sectors​
9 Most Prominent AML Penalties and Fines in the Insurance and Financial Services Sectors

1. Santander UK:
Santander UK was fined by the FCA for approximately £108m after discovering grave and repeated gaps in its anti-money laundering (AML) monitoring which impacted its commercial banking clients.

Between 2012 and 2017 in particular, the bank fell short of effectively managing its AML processes, which caused a considerable impact on the oversight and management of accounts for over 560,000 business customers. This is due to the improper verification of information provided by customers and failing to monitor account deposits against stated expectations.

According to Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, Santander’s poor anti-money laundering management caused a prolonged risk of financial crime and added that the watchdog continues to punish firms that don’t abide by AML laws as part of its effort to combat financial crime.

2. Natwest
In 2021, Natwest was fined £264.77m as a result of not complying with AML regulations, which marks the very first time that the FCA pursue criminal charges for AML breaches. The allegations were a result of failing to properly control the activity of one of their commercial clients, Fowler Oldfield, which forbade the bank from trading with cash. In fact, over the time of their relationship, the bank deposited approximately £264m in cash as reported by the FCA.

3. JLT Specialty Limited:
JLT Specialty limited is a broker based in the UK that provides insurance broking, risk management and insurance claims services. The FCA has fined the broker approximately £7.9 million for financial crime control failings. In fact, JLTSL even enabled bribery exceeding $3 million to happen. According to Mark Steward, Executive Director Enforcement and Market Oversight: “Lax controls by JLT Specialty meant, ultimately, that money flowed into the pockets of corrupt officials. It is because of risks such as this that we are maintaining our focus on financial businesses’ financial crime systems, taking action where these firms fall short”.

This was not the first time that the company was fined for lack of financial and business risks management responsibility. In December 2013, the watchdog fined JLTSL around £1.88 million for the same risk control failings, bribery and corruption issues.

4. HSBC UK :
The FCA imposed a fine of approximately £64 million on HSBC due to significant shortcomings in its transaction monitoring systems, a critical component of its anti-money laundering framework, between March 2010 and March 2018. Non-compliance with Suspicious Activity Report (SAR) regulations can lead to serious repercussions, including civil and criminal penalties such as hefty fines, regulatory constraints, or even the revocation of a bank’s charter. Failing to file a SAR after identifying potential money laundering risks could constitute a serious offense.

These “failure to disclose” offenses highlight a neglect of AML responsibilities, leaving organisations vulnerable to severe legal and financial consequences.

5. AIA Group (Hong Kong):
The Hong Kong Insurance Authority (IA) fined AIA International Limited HK$23m following an inspection of its compliance with AML regulations under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO). The review, covering March 2016 to October 2022, revealed issues with AIA’s AML system and algorithm, including failures to flag PEPs, delays in verifying customer funds, and insufficient enhanced due diligence for high-risk clients. In response, AIA has implemented upgrades to its AML processes, improved compliance oversight, and brought in an independent advisor to assess its measures.

6. Leigh Mackey:
Former insurance broker director Leigh Mackey has been banned from the financial services sector and fined over £1 million after an FCA investigation revealed misconduct at Inspire Insurance Services. Mackey misused insurer funds for business and personal expenses and submitted false regulatory reports, failing to conduct required client asset audits as reported by Insurance Times. The FCA deemed him unfit for the industry due to dishonesty and integrity concerns. Alongside the ban, Mackey must pay £968,479 in disgorgement and a £134,400 penalty. Inspire, placed into liquidation in 2020, owes over £2.2 million to insurers. According to Therese Chambers, joint executive director of enforcement and market oversight at the FCA: “This fine and ban shows how seriously we take individuals who abuse their position for personal gain and risk damaging the integrity of the UK’s financial system.”

7. Deutsche Bank AG:
The Financial Conduct Authority (FCA) fined Deutsche Bank for exposing the UK financial system to financial crime risks due to significant failings in its anti-money laundering (AML) controls. Between 2012 and 2014, inadequate oversight enabled over $10 billions of suspicious transactions, including $6 billion in “mirror trades” that transferred funds from Russia to offshore accounts, bypassing AML safeguards.The FCA cited deficiencies in customer due diligence, risk assessments, IT infrastructure, and trade monitoring. As Director of Enforcement and Market Oversight at the FCA Mark Steward stated: “The size of the fine reflects the seriousness of Deutsche Bank’s failings.  We have repeatedly told firms how to comply with our AML requirements and the failings of Deutsche Bank are simply unacceptable. Other firms should take notice of today’s fine and look again at their own AML procedures to ensure they do not face similar action.” Despite these breaches, Deutsche Bank cooperated fully, implemented a major remediation programme, and received a 30% fine discount, though it forfeited £9.1 million in profits linked to the violations. 

8. Standard Chartered:
Standard Chartered PLC, a leading British multinational bank, incurred an enormous fine of $1.1 billion in 2019, imposed by both UK and US regulators after the bank failed to adhere to AML and sanctions laws. The bank has been carrying out business with high-risk sanctioned countries like Syria and Iran, where it was facilitating transactions valued in the millions. Moreover, the bank’s internal systems were found to be incompetent, exacerbating the scale of the penalty. In 2012, Standard Chartered was already fined $330 million for similar illegal transactions in Iran, which worsened its current situation. This severe penalty serves as a lesson and a warning of the risks of not having proper AML systems and strategies in place, but also emphasises the dangers of failing to adhere to these laws.

9. Starling Bank:
The FCA fined Starling Bank £28.96 million for poor financial sanctions screening and breaching a commitment to avoid high-risk accounts. Between 2021 and 2023, more than 54,000 high-risk accounts were opened, and a 2023 review uncovered serious flaws in its screening system dating back to 2017, exposing the bank to financial crime risks. Therese Chambers reported that: “”Starling’s financial sanction screening controls were shockingly lax. It left the financial system wide open to criminals and those subject to sanctions. It compounded this by failing to properly comply with FCA requirements it had agreed to, which were put in place to lower the risk of Starling facilitating financial crime.

The Importance RegTech-powered AML compliance in B2B finance, with automated screening for sanctions, PEPs, and adverse media
Managing Counterparty Risk: Why AML Screening Matters More Than Ever in B2B

In today’s interconnected financial and insurance landscapes, the risk of inadvertently engaging with sanctioned entities, politically exposed persons (PEPs), or companies flagged in adverse media is higher than ever. While headlines often spotlight the large fines handed out by regulators like the FCA, the true cost of AML non-compliance runs deeper — from reputational damage to disrupted partnerships and regulatory scrutiny. 

For firms operating in B2B environments, where counterparties span geographies and industries, AML compliance must go beyond basic due diligence. It requires a robust, dynamic system that continually monitors who you’re doing business with — and flags risks before they become liabilities. 

That’s where RegTech delivers real impact. 

Regulatory technology enables automated, real-time screening of counterparties against global sanctions lists, PEPs databases, and adverse media sources. Instead of relying on fragmented checks or time-consuming manual processes, businesses can centralise their AML efforts in one intelligent platform — ensuring compliance is seamless, scalable, and built for the pace of modern trade. 

By integrating smart AML workflows at the counterparty level, firms not only protect themselves from facilitating illicit activity, but also demonstrate a commitment to ethical, transparent business. And with oversight handed to a specialised RegTech provider, compliance teams can focus on strategic growth without sacrificing control or quality. 

The result? Stronger B2B relationships, reduced regulatory exposure, and peace of mind knowing you’re on the right side of compliance — every time. 

The increasing regulatory pressure and the shift from manual AML checks to intelligent, automated compliance systems
What Does the Future Hold?

Regulatory pressure around AML compliance is only set to intensify — especially as global authorities tighten expectations around counterparty screening and third-party risk. For B2B firms, this means the margin for error is shrinking fast. 

Gone are the days when outdated systems and manual checks were enough to stay compliant. With sanctions regimes evolving, new PEPs emerging, and adverse media coverage surfacing in real time, businesses need to act swiftly and smartly. The cost of failing to identify a high-risk counterparty can be just as severe as direct misconduct — both financially and reputationally. 

To stay ahead, firms must embed strong internal controls that can continuously monitor counterparties, automate Know Your Business (KYB) and enhanced due diligence (EDD) workflows, and adapt to changing regulatory landscapes. 

This is exactly where RegTech steps in. By automating complex AML processes — from screening and risk scoring to real-time alerts — RegTech ensures businesses can confidently assess who they’re trading with and take proactive steps to mitigate exposure. 

The future belongs to firms that don’t just react to regulation, but build it into the fabric of how they do business. 

Speak to one of our experts to learn how REG Technologies can help you uphold AML responsibilities.

This article was published by:

Article author:

Victoria Slade

Victoria Slade is our Head of Sales at REG Technologies. Victoria helps insurance businesses adopt RegTech solutions, to manage existing and emerging regulatory and legal risks efficiently.

020 3946 2880

info@reg.uk.com

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