Regulatory penalties refer to fines, sanctions and other enforcement actions imposed by financial regulators on institutions that fail to comply with Know Your Customer (KYC), Anti-Money Laundering (AML) and other financial crime prevention regulations. 

These penalties can result from deficiencies in due diligence, failure to monitor transactions properly, lack of adequate controls or delays in reporting suspicious activities. 

Regulatory penalties vary in severity and may include monetary fines, restrictions on business operations or reputational damage that can impact an institution’s ability to operate.

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