Misconduct Costs

According to a late 2020 study1, three countries— the US, Australia, and Israel—accounted for 97% of the nearly ¤12 billion in bank fines issued last year.2 Notably, costly conduct scandals also threatened to further a recent shake up in the leadership ranks of European firms.3 In the Netherlands, ABN Amro reached a ¤480 million anti-money laundering settlement with Dutch prosecutors just last month.4 Between them, European and American firms have faced some $400 billion in misconduct fines since the Financial Crisis.5 In Asia, risk governance and compliance costs are estimated to have increased by some 20% year-on-year in 2020.6 

The Operational Risk Exchange (ORX)—an industry association of operational risk leaders at the world’s largest financial institutions—estimates that its member firms experienced operational risk related losses of ¤482 billion in the period 2014 through 2020, misconduct counting for much of that cost. An exhaustive accounting of misconduct costs experienced across the industry globally in the last year falls outside the scope of this report. But there are particular instances of note that warrant attention here.