Executive Summary
2022 saw FCA enforcement return to more typical levels following the pandemic-affected period, with total fines of approximately £215 million across 24 actions. The headline case was Santander UK's £107.8 million fine for serious and persistent AML control gaps - the largest AML fine since the NatWest criminal prosecution.
The year also marked increased attention to audit quality, with KPMG facing a £14.4 million fine for audit failures - reflecting coordinated regulatory focus alongside the Financial Reporting Council on audit standards in the financial services sector.
Regulatory Context
2022 represented the final preparatory phase before Consumer Duty implementation. The FCA published final rules in July 2022, giving firms until July 2023 for open products. This regulatory development represented the most significant conduct framework change since the Retail Distribution Review.
The Russia-Ukraine conflict prompted extensive sanctions compliance work across the industry. While no major FCA enforcement emerged directly from sanctions failures in 2022, the FCA issued clear expectations on controls and monitoring, with enforcement risk for firms failing to implement adequate procedures.
Operational resilience rules took effect in March 2022, requiring firms to identify important business services and set impact tolerances. The three-year transition period began, with firms required to demonstrate compliance by March 2025.
Key Enforcement Themes
- AML system failures attract record retail banking fine
- Audit quality receives coordinated regulatory attention
- PEP (Politically Exposed Persons) due diligence scrutinised
- Consumer credit firm enforcement continues
- Individual accountability cases progress through the system
Professional Insight
The Santander fine warrants careful analysis by compliance professionals. The FCA identified that the bank opened over 49,000 business accounts without completing required AML checks - a systemic failure rather than isolated incidents. The penalty calculation reflected both the seriousness and the persistence of the failings.
For AML practitioners, the case demonstrates that transaction monitoring is necessary but not sufficient. Customer due diligence at onboarding forms the foundation of effective AML controls. When CDD is incomplete, subsequent monitoring operates with fundamental information gaps that undermine effectiveness.
The KPMG fine signals that auditors of financial services firms face regulatory accountability alongside their clients. This creates incentives for more robust audit challenge, which should ultimately strengthen control environments across the industry.
Looking Ahead
2022 enforcement actions set the scene for continued AML focus in subsequent years. The FCA demonstrated willingness to pursue large retail institutions, not just wholesale or international banks. Firms should assume their AML controls will face supervisory scrutiny regardless of their business model.
The Consumer Duty implementation deadline created significant work for 2023, with firms needing to demonstrate genuine customer outcome focus rather than compliance box-ticking.