Enforcement Action

Regulators work along a ladder. At the bottom are informal tools: letters, warnings and supervisory feedback. Above them sit formal measures: public censure, fines, orders to stop or to fix problems, restrictions on business, removal of licences, bans on individuals, and referral to prosecutors. An action usually begins with an examination, complaint, report from the firm or market surveillance alert, followed by investigation, notice of allegations, a chance to respond and a decision, which may be agreed through settlement. Actions are mostly published, and databases of them are widely used in due diligence. Choice of tool depends on seriousness, harm, intent, history and cooperation. Reading the published actions shows what regulators really pursue, which can differ from what the rulebooks say.

During a routine examination, a regulator finds that a payments firm has failed to monitor transactions properly for two years. After a formal investigation it issues a notice of allegations, agrees a settlement including a fine, a 12-month remediation plan and a restriction on onboarding new high-risk customers, and publishes the order.