How to Avoid AML Fines?

Regulators are continuing to tighten enforcement worldwide since compliance failures, outdated systems and weak onboarding practices are still putting financial institutions in serious anti-money laundering (AML) risks. False positives, poor customer due diligence, ineffective monitoring, and similar other failures are being inspected by regulatory bodies more closely each year. 

In a 2024 bank-fines report, total aggregated bank fines globally in 2024 were around $4.5 billion, with AML/KYC violations being a major part of those fines.  In this blog post, we’ll be detailing how to avoid getting AML fines, which tools can help, and sector-specific AML risks companies need to keep an eye on.

What Are AML Fines and Who Issues Them?

AML fines are regulatory penalties that are imposed on companies that fail to comply with AML regulations, and they are issued by various regulatory bodies around the world. These fines are given to companies to make sure they are complying with laws that prevent money laundering, terrorist financing, and other related financial crime.

The Financial Action Task Force (FATF) is one of the most well-respected regulatory bodies, and it sets global standards for AML compliance while also monitoring countries to see whether they are adhering to the guidelines. In the U.S., Financial Crimes Enforcement Network (FinCEN) oversees compliance and issues fines for violations. In the UK, the Financial Conduct Authority (FCA) is tasked with a similar role, ensuring financial institutions follow AML rules. Similarly, in Australia, AUSTRAC regulates and enforces compliance, and the task is given to MASAK in Türkiye.

Regional and sector-specific authorities are also tasked with similar roles. The European Central Bank (ECB) and Germany’s BaFin are tasked with supervising banks and financial institutions in the European Union. In Asia, the Hong Kong Monetary Authority (HKMA) enforces AML regulations locally. The Dubai Financial Services Authority (DFSA) is tasked with overseeing compliance in the Dubai International Financial Centre.

What Triggers AML Fines?

AML fines are triggered mostly by prolonged or systematic compliance failures, rather than isolated mistakes. One of the most common causes is the failure to file Suspicious Activity Reports (SARs) in cases of suspicious or unusual transactions. Another reason for fines is inadequate Know Your Customer (KYC) checks, since these leave companies vulnerable to onboarding high-risk or fraudulent clients. 

Outdated or ineffective transaction monitoring systems and the failure to conduct Enhanced Due Diligence (EDD) on high-risk customers are also red flags that need to be addressed. There some other triggers like weak onboarding procedures, delays in updating sanction lists, insufficient risk assessments, and high rates of false positives may also lead to fines since the monitoring accuracy is not good enough.

According to Fenergo, global regulatory fines for financial institutions more than quadrupled in H1 2025 vs the same period in 2024. AML-related fines made up a large portion of this increase.  The fines for AML non-compliance don’t seem seem to be lessening any time soon.

What Are the Most Expensive AML Fines in History?

Non-compliance comes with heavy fines and the following examples are some of the most expensive examples for not following regulatory rules. In 2024, TD Bank in Canada was fined $3.1 billion by FinCEN and the OCC for not following through with internal AML alerts, showing the results of systemic oversight failures.

Our second case, Danske Bank faced a $2 billion fine in 2022 from the DOJ and SEC after €200 billion was laundered through its Estonian branch. This case is one of the most notorious money-laundering scandals in recent history. Another example, Deutsche Bank was fined $630 million in 2019 by the UK FCA and New York DFS over the involvement of the bank in a mirror trading scheme. The final case we’ll mention is about Westpac. Westpac, in Australia, received a $920 million penalty in 2020 from AUSTRAC for breaches of the AML/CTF Act in over 23 million transactions.

How to Avoid AML Fines: 10 Proven Steps

1. Implement a Risk-Based AML Program

A risk-based AML program will help your company in focusing resources where they are needed most. This program can involve identifying high-risk customers, allocating resources according to risk levels, and using customer risk scoring to fine-tune monitoring and due diligence.

2. Automate KYC and CDD Workflows

Automating KYC and CDD processes by using AML tools is recommended for companies. Firms should be verifying identity documents, assessing sources of funds, and maintaining up-to-date KYC profiles. Automation helps reduce errors and speeds up processes.

3. Monitor Transactions in Real Time

Real-time transaction monitoring will help allow companies to detect suspicious activities as they happen. Implementing velocity checks and setting alerts for red flags like structuring or unusual transfers will help companies catch potential violations early. 

4. Screen Against Global Sanction Lists Daily

Companies can stay compliant with international regulations by screening customers and transactions against global sanction lists daily. Accessing OFAC, UN, EU, and HM Treasury lists in real time, automating updates, and checking against PEPs and other watchlists is recommended to prevent financial crime.

5. Ensure Effective Ongoing Monitoring

Your company should be tracking customer behaviour over time, monitoring life-cycle changes, and flagging anomalies without delays. Continuing checks after onboarding will help protect firms. Companies should be escalating issues for investigation when unusual patterns are seen within transactions.

6. Strengthen Internal Controls and Governance

Strong internal controls are needed, and one recommendation for companies is for them to hire a Money Laundering Reporting Officer (MLRO). Companies should be clearly defining roles and responsibilities, and conducting regular AML training for staff. 

7. File SARs and CTRs Timely and Accurately

Filing and sending out Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs) in a timely manner is important for avoiding fines. Companies can set internal deadlines, maintain thorough documentation, and monitor recurring suspicious patterns to reach AML compliance.

8. Perform Regular AML Audits and Gap Analysis

Regular audits and gap analyses can help identify weaknesses in your AML program. Using RegTech platforms to tech policy enforcement, assess system efficiency, and preparing for FATF inspections is recommended. Continuous improvement and efforts can reduce the risk of fines.

9. Apply Enhanced Due Diligence (EDD) for High-Risk Entities

High-risk customers like politically exposed persons (PEPs) or entities in high-risk jurisdictions may need more attention and enhanced scrutiny. Firms should be applying additional verification procedures, gathering extra documentation, and maintaining heightened monitoring.

10. Keep Records and Evidence for 5+ Years

Companies should be keeping records of transactions, due diligence and internal investigations for at least five years, since it is required by most AML regulations. It is recommended to store documentation securely and automate audit trails for regulatory reviews.

Sector-Specific AML Risks and Fines

AML risks and fines can change depending on the sector since each industry has their own challenges. The cryptocurrency sector is considered very high risk since non-compliance with the Travel Rule is high and transactions can be anonymous. Next, Gaming and iGaming platforms face high risks because of weak onboarding procedures and high-volume cash flows, which can be used to hide suspicious activity.

Real estate is another sector that is filled with high-risk scenarios, since all-cash transactions and offshore buyers can be involved in money laundering. Fintech companies are seen as medium-to-high risk since fast onboarding they provide and limited historical customer data can make due diligence more difficult.

Traditional banks are still seen as high risk since they have legacy systems and global operations which can make monitoring more difficult. Even charities can face medium-level AML risks, since donor anonymity and cross-border transfers can be exploited for financial crime.

Tools to Help You Stay Compliant

There are various tools that can help companies stay compliant, even if the challenges they fae are getting more complex each year. For KYC and EDD, tools that verify documents, detect ultimate beneficial owners (UBOs), and apply risk scoring can make onboarding faster and reduce errors. Name and sanction screening solutions should be able to provide real-time checks and fuzzy matching to catch variations in names.

Transaction monitoring tools can benefit from having both rule-based systems and AI/ML engines which can score alerts and identify odd patterns. Ongoing monitoring requires continuous screening and change detection to make sure no update is missed by the system. Case management tools also need to help firms collect evidence and maintain audit trails. 

How Sanction Scanner Helps You Avoid AML Fines

Sanction Scanner supports 800 institutions in over 70 countries with AML compliance. Our platform offers PEP, sanction, and adverse media screening. These are coupled up with transaction monitoring and anomaly detection to make sure no suspicious activity is ignored. Some other services are advanced risk scoring, and integrated case management system, and daily updates to global sanctions lists.

Sanction Scanner also keeps a full audit trail to make sure everything is documented and can be brought up when needed for regulatory reviews. Sanction Scanner helps firms reduce risk and avoid heavy AML fines by combining all of these features in one tool.