The US KYC/AML Compliance Industry

Goals

To understand the size, spending, and inefficiencies in the US KYC/AML industry--focused on the KYC/AML software segment.

Early Findings

Inefficiencies

  • "The United States accounts for nearly 44 percent of all global regulatory AML/KYC fines, and 91 percent of the total" fines over the 2008-18 period ($23.52 billion)."
  • "The U.S. Department of Justice, imposed the most financial penalties for non-compliance, levying half of the global AML/sanctions fines amount (nearly $14 billion), followed by the New York Department of Financial Services at $3.6 billion."
  • "In the US, where regulators are among the world’s most aggressive in imposing fines and sanctions, banks have been hit with nearly US$24 billion in non-compliance fines since 2008."
  • US regulators levied $4.3 billion in fines during the period from October 2018 to December 2019 for AML and sanctions violations, compared with $1.5bn in fines issued in the same period before.
  • "The majority (86% or $3.76B) of fines issued by US regulators relate to sanctions violations." The AML-related fines amounted to 590 million ($4.35B-$3.76B).
  • "The average fine value issued by US regulators to foreign banks was 10 times higher (in $) than those issued to domestic banks."
  • "Two-thirds of all fines issued by US regulators were aimed at European financial institutions for AML breaches and sanctions violations with countries such as Iran, Cuba, North Korea, Sudan, Libya and Myanmar."

Spending or Size

  • "In the US alone, banks are spending more than $25 billion a year on AML compliance."
  • "Some banks spend up to $500 million each year in an effort to improve and manage their Know-Your-Customer (KYC) and Anti- Money Laundering (AML) processes." The average bank spends around $48 million per year."

Proposed next steps:

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