Germany’s Federal Financial Supervisory Authority, otherwise known as BaFin, announced the apparently record fine Thursday (Nov. 6), saying the banking giant had “systematically” failed to file timely suspicious activity reports between October 2021 and September 2022.
According to BaFin’s announcement, Germany’s money laundering legislation requires banks to issue a report to the German Financial Intelligence Unit (FIU) if they suspect that a transaction might be tied to money laundering or terrorist financing.
These reports “must be submitted without delay,” BaFin said, to allow the FIU to take action if needed, such as by passing on the information to law enforcement.
“In the case of systematic breaches, the amount of the administrative fine can be determined according to the institution’s total turnover,” the regulator said. “This can result in very high administrative fines, as in the present case.”
JPMorgan is the largest bank in America, with a market capitalization that exceeds that of the next three biggest banks combined. While BaFin does not make it explicit, several reports call it the largest fine the group has ever imposed against a bank.
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“The fine relates to historical findings and the timing of our Suspicious Activity Report filings did not impede any investigations by the authorities,” JPMorgan said, per a report on the penalty by the Financial Times (FT). The bank added that it was “deeply committed to detecting, preventing and reporting money laundering and financial crimes.”
Sources familiar with the bank’s processes told the FT that JPMorgan had since overhauled its systems and tripled the staff in its financial crimes compliance unit since 2021.
In other money laundering news, PYMNTS wrote about what financial crime prevention compliance looks like in the age of cryptocurrency.
Traditional compliance methods, that report said, face an uphill fight in the crypto world, as. pseudonymity, code-driven transactions and borderless systems don’t naturally mix with laws created for a system of centralized banks and paper trails.
“But as crypto firms increasingly go public…compliance is becoming a priority, particularly around anti-money-laundering (AML) and financial crime (Fin Crime) frameworks,” that report said. “After all, for crypto to be legitimized, its risk controls must be legitimate.”
