UBS Wealth Management USA has agreed to pay a total of $125 million in fines due to persistent anti-money laundering (AML) deficiencies. The penalties stem from allegations of failures between January 2019 and June 2023, specifically in supervising over 60,000 foreign currency wires totaling more than $10 billion. These wires exhibited multiple red flags, such as high-risk geographic origins, excessive transfers, unusually large amounts, a lack of apparent business purpose, and instances where accounts had previously been flagged for suspicious activity. The Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) imposed a $125 million fine, labeling it the largest sanction ever against a broker-dealer for Bank Secrecy Act violations.
Additional penalties contributing to the $125 million total include $20 million each from the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC), and an $8 million fine from the Commodity Futures Trading Commission (CFTC). FinCEN is crediting these amounts against its own fine. Regulators also noted that UBS failed to properly implement a customer due diligence program for clients with specific risk factors, including those connected to high-risk areas like Russia or those with adverse media or political exposure. This resulted in UBS allegedly not identifying or reporting suspicious transactions for these clients.
The current penalties follow a combined $14.5 million fine in 2018 from the SEC, FINRA, and FinCEN for similar AML failures, specifically regarding foreign currency wires. Despite assurances to update its systems, UBS continued using its deficient legacy monitoring system until 2021. Even after updating its automated detection systems in 2021, regulators found errors, incomplete data, or mislabeling that led to ongoing supervisory issues. UBS admitted to willfully violating the Bank Secrecy Act in the FinCEN settlement, while settling the SEC and FINRA allegations without admitting or denying the findings.
FinCEN Director Andrea Gacki stated that this "historic action" against UBS should convey a clear message that financial institutions with a history of violations will face severe repercussions. She emphasized that such institutions jeopardize the integrity of the financial system, particularly when they expose it to high-risk customers and activities without effective controls. A UBS spokesperson stated that the settlements bring "closure to this legacy matter" and that the firm has cooperated fully with regulators, making significant investments to remediate and strengthen its AML program to align with leading industry practices. UBS could reduce its FinCEN penalty by $15 million if it undertakes an independent review and implements the recommendations.
