Wolters Kluwer Regulatory Violations Intelligence Index shows notable increases in total regulatory violations for first half of 2024

Minneapolis — September 25, 2024 — Wolters Kluwer Compliance Solutions’ latest Regulatory Violations Intelligence Index shows notable increases in the total number of violations cited by agencies during the first half of 2024 compared to 2023 second half results in two of three major category it tracks—Consumer Protection and Financial Offenses—while dramatically falling off in the Competition-related offenses category. Collectively, penalty amounts declined significantly.

Across the three index categories, 199 violations were issued in the first half of 2024, compared to 136 in the previous six-month period. In terms of penalty amounts, a total of $1.876 billion in penalties were issued in the first six months of 2024, a 76 percent decline from the $7.977 billion issued in the second half of 2023.

The Regulatory Violations Intelligence Index provides strategic insights into the aggregate volumes and penalty amounts issued to financial services institutions in the United States for key violation categories across federal and state regulatory bodies. Wolters Kluwer updates the Index semi-annually to give compliance professionals a timely, holistic view of the evolving supervisory priorities of key regulators for banks, brokerage firms and insurance providers.

“Notably, these latest results show the pronounced volatility of the financial services regulatory environment,” says Vikram Savkar, Executive Vice President and General Manager, Wolters Kluwer Compliance Solutions, who notes that enforcement action intelligence is a lagging indicator of regulatory supervision activities and strategic priorities.

“Timing drivers can range from an institution’s investigation duration to examination cadences, while penalty values can be linked to external factors like whistleblower complaints or unexpected enterprise failures,” explains Savkar. “While these variances manifest themselves at different volumes and intervals, it that clear that supervisory action is anything but static. Financial services firms would be well advised to remain vigilant in their compliance and risk management practices given today’s ever-evolving regulatory landscape.”

Competition-Related Violations

·Competition-related violations experienced a dramatic fall-off between H2 2023 and H1 2024, declining from 41 actions to one, with penalty issuance dropping from approximately $324M to $2M.

·However, the H1 value may represent a mean reversion, as the 41 actions observed in H2 2023 are an outlier to the 6-year trendline for competition-related enforcement actions.

Consumer Protection-Related Violations

·Consumer protection-related violations demonstrated a stable volume of enforcement actions, 66 in H1 2024 versus 64 in H2 2023, coupled with a substantial 63 percent drop in total penalty value.

·Notably, two of the largest agency actions in the period related to redlining practices and racially discriminatory mortgage lending practices.

Financial Violations

·Financial violations reached a total of 132 in H1 2024, a 128 percent increase over the 58 category violations issued in H2 2023, while the total penalty value dropped by approximately 70 percent.

·Similar to the competition-related violations category, several blockbuster financial violation penalties in H2 2023 issued to alternative asset and digital currency providers make the period appear to be an outlier to the overall trend in terms of average violation amounts.

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