Why AML Fines Became so Frequent and What’s Next for the Industry?

Financial news is currently featuring increasing number of cases on banks and payment systems failing to comply with Anti-Money Laundering (AML) legislation, resulting in significant fines imposed on violators. However, these stories often seem to fade into the background, and many professionals do not consider what exactly led to such situations and what “non-compliance with AML legislation” specifically entails.

Today, many business models have become subjects of AML discussions, including gaming and iGaming products also. As institutions handling third-party funds (players are indeed third parties), online casinos can become targets for fraudsters and money launderers. Payment systems and banks are even more susceptible to such risks. Using them for various schemes is easier than with any iGaming product. For fraudsters, the main goal is to open an account and maintain it for as long as possible before the AML and fraud department notices and closes it. Essentially, most schemes rely on using regular payment institutions uninvolved to criminal activities, attempting to deceive them.

This is why fintech companies develop multi-stage client verification procedures before opening any accounts. This allows them to be as confident as possible that potential client is honest and plans to use account for lawful purposes. Most basic procedures are regulated by financial authorities, depending on the country where payment system is licensed. Each PSP can adapt these rules to its own processes and choose suitable methods for verifying users. However, many make serious oversights in this process, often unintentionally. Regulators periodically conduct audits to ensure the quality of such programs, and this is where violations are often identified.

Large online banks or wallets that grow faster than their operational abilities can handle are particularly prone to poor AML procedures. The reason for non-compliance with legislation is often simple negligence, an insufficiently serious approach to the matter, and low investment in the AML department. All this combined leads to important cases being overlooked, and account openings becoming a streamlined process where checks are given little attention, as the focus is more on growing client base and profits.

The well-known payment system Worldline, which supports new WERO wallet in Europe, in its pursuit of profit, also found itself at the center of such an investigation. German regulator BaFin prohibited its subsidiary Payone from working with 450 clients in 2023 and imposed sanctions on the company for non-compliance with AML requirements. The situation caused a stir in the media, and Worldline's shares lost nearly 90% of their value from 2021 to the present. Although payment company claims to have ceased cooperation with all merchants violating anti-fraud measures, this did not significantly help in restoring its market value. Some media outlets claim that the company was well aware of all its merchants and concealed the facts of violations to avoid losing profits.

Other high-profile AML violation cases have also made waves in the industry over the past few years:

Monzo

The largest British online bank, Monzo, was recently fined over £21 million for inadequate protection against financial crimes, including allowing customers to register accounts at “clearly implausible” addresses such as Buckingham Palace and 10 Downing Street.

According to the FCA, Monzo repeatedly opened accounts for 34,000 high-risk clients between August 2020 and June 2022, despite a direct ban from the regulator. FCA states that Monzo's control systems aimed at combating financial crimes have not kept pace with the rapid growth in the number of clients in recent years, which surged from 600,000 in 2018 to over 5.8 million in 2022.

Such a clear drive for rapid market capture has been detrimental to the company's finances, as the imposed fine is quite significant. Additionally, it will affect user trust, as the online bank indeed holds an honorable place among fintech in the UK.

ING Bank in Spain

The regulator fined Spanish branch of the Dutch bank €3,919,300 million for very serious violations of AML legislation.

The reason for that fine was insufficient quality reporting of all suspicious transactions. That is, bank did not report various potentially dangerous payments to the regulator. This allowed many clients to violate AML rules, and the bank became an accomplice to crimes. Moreover, this attitude towards these obligations has been noted more than once with ING. In 2018, it already paid a fine of €775 million in the Netherlands for the same reason.

Whether this was done intentionally or was simply an oversight was not disclosed in the investigation, but the bank is under close scrutiny.

OTP and MBH Bank

The Central Bank of Hungary in late 2024 imposed fines on OTP and MBH Bank for shortcomings in AML and CTF. The total amount of fines exceeds €100,000.

The reasons for fines were insufficient mechanisms for client control and data verification, weak transaction monitoring, and inadequate verification of sources of client funds. All this together forms weak protection against fraud and scammers who could use the banks for their purposes.

In this case, both banks were given clear feedback and individual recommendations for improvements. Being already one of the strictest regions in terms of AML regulation, Europe is even more strongly reminding fintech that any gap in this area will cost them serious money.

Metro Bank in the UK

An audit of Metro Bank's activities from 2016 to 2020 revealed a number of violations in the field of AML and user information verification.

It turned out that over 60 million transactions totaling £51 billion passed through the system without a sufficient level of verification. The monitoring system worked incorrectly, and this problem was noticed by one of the company's specialists, but it was not fixed quickly enough, so all transactions during this period were subject to fines. The audit was conducted in 2024, means years later. It is important to note that even old oversights can “surface” later, and if they existed, the regulator will likely notice them.

Initially, Metro Bank was supposed to pay £23.8 million, but the amount was reduced because the fintech admitted its mistakes and was willing to cooperate with the FCA.

Payeer in Lithuania

The electronic payment system Payeer, which, in addition to payments, provides wallet and crypto exchange services, was fined €9.29 million by the Lithuanian Criminal Investigation Service (FNTT) in the summer of 2024 for violating AML legislation.

As additionally clarified, the specific reason for such a fine was company's activities with Russian ruble and the provision of exchange with this currency unhindered, including through local Russian banks. Thus, Payeer violated the sanctions regime and did not properly identify clients (which is an AML violation).

According to the investigation data, company earned €164 million from this violation. Interestingly, the fine amount is significantly less than the actual earnings from non-compliance with AML rules, meaning the company still came out with profit, even making such mistakes. Although this is not always the case, this example is highly indicative.

All these fines confirm that payment monitoring will only intensify, and laws in this area will become stricter. This means that even honest clients may feel this trend, as it will become more difficult for them to open accounts. As a reminder, Monoup helps in opening accounts even for startups, taking into account all relevant procedures, and will help you create a quality AML structure that will satisfy financial institutions. To avoid getting caught in the trap of constant unclear compliance requirements, work with us and get your account within a reasonable timeframe.

In addition to businesses, ordinary users are wary of AML checks, as they often limit the ability to move funds smoothly and quickly, affecting the speed of payments. This, in turn, brings inconvenience to standard financial flows. It seems that AML literally interferes with making payments, and legitimate payments can come under scrutiny too. Although such a chance remains, monitoring and checks are indispensable in the future.

Complete transparency is what the global financial system aims to achieve. A fintech world where every payment is tracked and checked instantly, where it is known who, where, and why is sending money; where nothing is hidden. 

Although this sounds like a utopia and something unrealistic, the world is confidently moving towards this. Cryptocurrency, as a way to avoid “problems” with constant AML checks, is also taking a back seat, as many countries have already regulated cryptocurrency and developed methods for tracking transactions and verifying all clients of crypto exchanges. The task of the AML system is to prevent the anonymity of payments and see everything. Based on this, it can be concluded that the development of AML systems as an afterthought and a negligent attitude towards this issue will soon be a thing of the past. If you are still postponing improving your AML instruments, and your business falls into the risky category, consider the potential future costs if such problems are not fixed right now.