February 4th, 2019 | by Kamil Kwećka

True Price of Non-Compliance for Financial Institutions and Banks | CSHARK & Fenergo

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Non-compliance is expensive.

Over the last 10 years, financial institutions across the world have been fined a monumental €27 billion for lapses and non-compliance with anti-money laundering (AML), know-your-customer (KYC), and sanctions-related fines (data provided by Fenergo – a leading vendor offering digital regulatory and client lifecycle management software).

In this article, you’ll learn:

  • Are financial regulations currently eased or enhanced?
  • What are the risks and costs of non-compliance (with real-life examples)?
  • How Fenergo helps financial institutions be more compliant?
  • What solutions does Fenergo offer for its clients?
  • Good practices of how to ensure compliance in your organization.

We’ll show you how to avoid failing to comply with financial regulations, which can result in severe consequences for your company, such as hefty fines and loss of reputation.

Financial Regulations – Eased or Enhanced?

While we expected the regulations to ease over the coming years, we see instances where the fines’ cost is shooting up.

It happens in both mature regulatory markets (such as Europe, the UK, etc.) and across less mature ones (e.g. APAC).

We’ve seen existing regulations enhance (FinCEN Final Rule in the US, 5th EU Money Laundering Directive, and MiFID II in Europe). We’ve also seen the introduction of new regulations such as MiFID II and data privacy laws like GDPR. Furthermore, we’re witnessing more proactive enforcement of regulatory rules across Australia, Hong Kong, and Singapore.

Risks and Costs of Non-Compliance

Dirty money costs financial institutions and their clients alike.

The article on financial safety The Cost of Dirty Money by Bloomberg explicitly shows us how much limited oversight or faulty procedures cost.

$1.9 billion paid by a bank is pretty hurtful.

The bank had to pay the fine for failing to control over $670 billion worth of wire transfers from Mexico and over $9.4 billion in purchases in the U.S. These funds were used to create a system for laundering drug cartels’ money.

That’s not all.

$237 million is the overall fine that another major institution had to pay because it didn’t track its subsidiary well enough.

The subsidiary in question processed over $8.8 billion worth of transactions from 2007 to 2012. Almost no oversight was detected. That forced the Federal Deposit Insurance Corporation and the California Department of Business Oversight to administer a huge punishment.

Still not enough?

  • Since 2008, European-headquartered banks have been fined $18 billion by US regulators, just for the AML and KYC fines alone.
  • Institutions headquartered in the APAC region have been fined a total of $1.3 billion by US regulators.
  • Europe accounts for 7% of global AML fines levied in the past 10 years, totaling over $1.7 billion across 83 separate fines.

These real-life examples give us a good idea of what happens if banks don’t invest in systems covering clients’ deposits and don’t allow for internal transparency.

How to deal with the challenge of increasing regulatory compliance? You can learn this from our special e-book on the digital transformation journey in finance.

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Navigating the Digital Transformation Journey in Finance and Banking


CSHARK x Fenergo: Helping Financial Firms Be Compliant

CSHARK helps to provide increased protection for financial institutions striving to do business in an ever-connected but highly regulated world.

We partner with the industry-leading provider of regulatory and digital technologies for financial institutions – Fenergo.

They help financial institutions comply with local and global regulations, protecting their reputation, digitalizing operations, and generating significant efficiencies and cost-saving.

Despite a global crackdown that has rained upon banks as a direct implication of the 2008 crisis, solutions of Fenergo help financial firms improve operational efficiencies that create optimized client experiences.

Read more: How Do We Help Financial Companies Grow?

Compliance by Design – Fenergo and Their Solutions

The company offers the Regulatory Rules Engine. It’s an intelligent solution that provides an out-of-the-box, easily configured repository of rules. Financial institutions can utilize them to future-proof their business against evolving regulatory and operational requirements.

Fenergo also operates global regulatory compliance forums. They comprise senior regulatory representatives of its global client base, culminating in a pool of 20,000+ compliance professionals.

These forums have direct input into the Regulatory Roadmap. It helps financial institutions to manage regulatory change as business as usual. Furthermore, it ensures they achieve compliance ahead of the regulator’s deadline.

When the roadmap is ready, the company translates it into codified rules for the software, ensuring regulatory currency for all clients. They effectively give the clients time to get ahead of upcoming implementation deadlines, without additional licensing or development costs.

A global community of clients working together to ensure safety is unique in itself.

In short, Fenergo’s solutions offer:

  • Efficient client onboarding and client lifecycle management processes that improve time to onboard and time to revenue for financial institutions.
  • Insight into all client’s counterparties and all related associations, including beneficial owners.
  • Global AML risk-based approach to regulatory coverage with many local and global AML typologies and regulations, such as AML/KYC rules, e.g. Fifth European AML Directive, FinCEN Final Rule (CDD), OTC Derivative rules (Dodd-Frank, MiFID II, EMIR), tax compliance (FATCA, CRS, 871m), data privacy rules (GDPR), etc.
  • Accurate identification and assessment of potential client risks, enabling financial institutions to refocus resources and effort on managing higher-risk clients.

Read more: What to Look For When Selecting a FinTech Partner?

Follow the Money (and the Good Practices)

An efficient client onboarding and managing through the whole lifecycle can save not only banks’ and clients’ money but also the image. To achieve this, automation should be in place.

Read more: We Have Reduced the Onboarding Time for Our Client by 82%

To keep on top of an ever-evolving regulatory landscape where new regs are introduced every year and existing regulations undergo constant updating, financial institutions need to automate processes as much as they can. This will free up resources to focus on higher-risk clients and tasks for human oversight.

Financial institutions should aim to eliminate regulatory interpretation and introduce consistency into the regulatory compliance decision-making process (Rules Engine by Fenergo can do that).

Future-proofing the organization will also help, by collaborating with other financial institutions and ensuring that the company in question meets regulatory deadlines on time, every time (compliance by design).

After all, the area of compliance is non-competitive.


If you’re representing a bank or a financial institution, you need to invest in compliance programs, including technology and risk management.

That will ensure your organization remains compliant with all relevant regulations. By doing so, you can safeguard its reputation, protect your customers, and maintain a stable financial system.

Fenergo’s products and CSHARK’s collaboration shows that a united front can (and will) make a difference for financial institutions.

Remember, the cost of non-compliance is far greater than the cost of compliance.

If you want to drive change in your company – learn more about our services for financial institutions and banks.


Reach us

Kamil Kwećka

Co-Founder & Board Member

Co-founder and board member of CSHARK. Tech expert with over 10 years of software engineering expertise and technical background. Believes in a practical agile approach. Always with a positive attitude. Writes about business, FinTech, software, startups, and leadership.