Wolters Kluwer analysis shows regulatory enforcement pivot: Fewer actions with substantially higher penalties

Latest Regulatory Violations Intelligence Index cites heightened penalty amounts in second half of 2024

Wolters Kluwer Compliance Solutions has released its latest Regulatory Violations Intelligence Index, analyzing regulatory enforcement activity in the U.S. financial services sector from the second half of 2024. The findings reveal a significant strategic shift in enforcement approach just prior to the current administration's deregulatory agenda, with agencies pursuing fewer but substantially higher-value enforcement actions.

Across the three monitored categories, regulators issued 145 violations in the second half of 2024, down 35 percent from 223 in the first half of the year. However, total penalty amounts increased dramatically to $5.44 billion, representing an 83 percent jump from the $2.94 billion assessed in the preceding six months.

"This enforcement pivot toward fewer but more impactful actions provides an important baseline as we enter a period of significant regulatory transformation," said Elaine Duffus, Senior Regulatory Analyst at Wolters Kluwer Compliance Solutions. "While violation volumes dropped to levels similar to 2022-2023, the sharp increase in penalty amounts signals a focused approach on high-impact enforcement that could carry implications even in a deregulatory environment."

Key Findings by Category

• Competition-related violations: Increased from three actions to eight between the first and second half of 2024, while penalties declined 20 percent to $632 million. The largest action involved four major banks paying approximately $500 million to settle litigation alleging collusion to block modernization of the stock loan market.
• Consumer protection-related violations: Remained relatively stable with 77 actions in H2 2024 compared to 83 in the first half, but saw a substantial 93 percent increase in penalty amounts. The largest action was a CFPB enforcement against a fintech provider for $175 million related to inadequate security protocols.
• Financial violations: Saw the most dramatic shifts, with actions decreasing 56 percent from 137 to 60, while penalty amounts more than doubled with a 125 percent increase. The category's largest violation was a DOJ action against a top 10 U.S. bank for approximately $3.1 billion related to Bank Secrecy Act and money laundering violations.

The historical data shows enforcement actions and penalties fluctuating around consistent trendlines over the past six years, with the recent shift suggesting a strategic recalibration by regulators toward targeting higher-value infractions while reducing overall enforcement volume.

"As we witness the current administration's focus on financial services deregulation, including potential changes to Dodd-Frank and shifts in agency enforcement priorities, these findings take on added significance," notes Duffus. "Financial institutions should pair landscape data analytics with real-time monitoring of political and regulatory signals to adapt effectively to this evolving environment. The next Index release will provide valuable insights into how these policy changes are impacting the regulatory enforcement landscape."

Issued semi-annually, the Index delivers expert analysis and deep insights into regulatory enforcement actions of interest to commercial banks, broker-dealers, and other financial services firms, citing total violations volume and aggregate penalty dollar values across banking, securities, and insurance firms.

Wolters Kluwer Compliance Solutions is a market leader and trusted provider of risk management and regulatory compliance solutions and services to U.S. banks, credit unions, insurers and securities firms. The business, which sits within the Wolters Kluwer Financial & Corporate Compliance (FCC) division, helps these financial institutions efficiently manage risk and regulatory compliance obligations, and gain the insights needed to focus on better serving their customers and growing their business.

For more information about Wolters Kluwer, please visit www.wolterskluwer.com.

About Wolters Kluwer

Wolters Kluwer (EURONEXT: WKL) is a global leader in information, software solutions, and services for professionals in healthcare, tax and accounting, financial and corporate compliance, legal and regulatory, corporate performance, and ESG. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with technology and services.

Wolters Kluwer reported 2024 annual revenues of €5.9 billion. The group serves customers in over 180 countries, maintains operations in over 40 countries, and employs approximately 21,400 people worldwide. The company is headquartered in Alphen aan den Rijn, the Netherlands.

For more information, visit www.wolterskluwer.com and follow us on LinkedIn, Facebook, YouTube, and Instagram.

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"This enforcement pivot toward fewer but more impactful actions provides an important baseline as we enter a period of significant regulatory transformation," said Elaine Duffus, Senior Regulatory Analyst at Wolters Kluwer Compliance Solutions.