As penalties soar in financial crime cases, an inside look at how much US agencies are collecting

Amid an ongoing debate over the effectiveness of monetary penalties and the need for individual accountability in financial crime enforcement actions, the old saying “don’t do the crime if you can’t do the time” still doesn’t seem to apply to major financial institutions. Instead, a more accurate phrase might be “don’t do the crime if you can’t pay the fine.”

Advocacy groups and some US politicians continue to criticize US enforcement agencies over what they characterize as weak enforcement and a failure to prevent systemic violations at major banks and other financial institutions. However, US regulatory and enforcement agencies have a stellar track record when it comes to imposing monetary penalties. In recent years, criminal and civil penalties in money laundering, sanctions and fraud cases have increased exponentially, and show no signs of going anywhere but up.

Last week, the penalty on BNP Paribas was a shining example of this push for higher monetary penalties that are intended to better reflect the severity of a financial institution’s infractions. In a guilty plea, BNP Paribas agreed to pay $8.9 billion to several US agencies, including the Department of Justice, New York State Department of Financial Services (DFS) and the Office of Foreign Assets Control. The DFS alone received more than $2.2 billion in the agreement. According to the DFS, the largest bank in France agreed to pay the record-breaking sum to settle criminal charges for conducting as much as $190 billion in transactions in violation of US sanctions on Iran, the Sudan and Cuba.

Contrast that penalty with the Standard Chartered case in 2012, in which the British banking giant agreed to pay a $340 million penalty to the DFS for what the agency alleged were $250 billion worth of transaction in violation of US sanctions. At the time, the penalty grabbed headlines and generated controversy. Two years later, it appears Standard Chartered got off with a bargain.

US agencies usually coordinate to investigate and bring cases – but how much does each agency collect after the gavel drops? ACFCS took a comprehensive look at the results of different US government regulatory and enforcement agencies involved in bringing financial crime cases and collecting criminal or civil penalties in 2013.

The data was gathered through annual reports, news releases and independent analyses. Click through the presentation below to see how much each agency took in during the 2013 fiscal year. It should be noted that this sum is not always pure revenue for each agency. Instead, it is often disbursed among other federal and state agencies, or placed in a general fund. For agencies with a regulatory or enforcement scope beyond financial crime, some of these totals represent a best estimate of penalties connected to financial crime cases.

However, the steady increase in the number of cases being brought, as well as the total amount per violation, shows that a pattern of tougher enforcement is being adopted across the board, and monetary penalties remain a weapon of choice for US agencies.

View Presentation

Highlights and relevant links:
1)Department of Justice – $3.89 billion estimated related to financial crime cases
– Total collected in FY 2013 ($8.1 Billion in Civil and Criminal cases) was less than the total BNP Penalty in June 2014)
– $2.6 billion collected in health care fraud cases
– $42 million in criminal penalties in tax fraud cases
– Press release from Jan. 2014 detailing total collected in 2013 criminal and civil cases:
– Total collected represents more than 3 times the amount appropriated for the department.

2)Office of Foreign Assets Control – $137 Million
– In 2009, Congress increased the max cap per violation from $11,000 to $250,000 or twice the value of the transaction.
– 2013 penalties totaled $137 million for 26 matters
– The Treasury Department’s Office of Foreign Assets Control has also levied a fine of $963 million for the BNP Paribas case.
– In 2014 so far, 13 penalties have been levied by OFAC, totaling: $ 1,185,946,672… and counting.

3)Financial Crimes Enforcement Network – $41.6 Million
– Among other roles, FinCEN is the primary federal agency responsible for regulating money services businesses in the US
– Enforcement Actions list for Failure to Register as a Money Services Business from 1999 to 2014:

4)Office of the Comptroller of the Currency – $480 Million
– 25 enforcement actions in 2013.
– JP Morgan Chase paid $360 Million of that total.

5)Federal Deposit Insurance Corporation – $11 Million
– 27 enforcement actions against individuals.
– 23 enforcement actions against institutions.
– The FDIC was down three million from FY 2012.

6) Internal Revenue Service Criminal Investigation – $982 Million
– Forfeitures – $517,026,852
– Asset seizures – $465,150,567
– This agency doesn’t impose monetary penalties, but they have a substantial forfeiture and asset seizure collection.

7)New York State Department of Financial Services – $60.4 Million
– While a state agency, they collect more than some national agencies
– They will collect $2.24 Billion from the BNP Paribas penalty – more than 3,000 times their total collected in FY 2013.

8)Securities and Exchange Commission -$3.4 Billion
– 686 enforcement actions in FY 2013, 10 percent higher sum than 2012 and 22 percent higher than 2011.
– Statistics on FY 2013:

9)Consumer Financial Protection Bureau – $49.5 Million
– Founded just two years ago
– FY 2013, the Bureau collected civil penalties from 11 defendants.
– FY 2012, the Bureau collected civil penalties from 2 defendants totaling 32 Million.
– Annual report: