UBS Financial Services has been hit with a record $125 million penalty by the Treasury Department's Financial Crimes Enforcement Network (FinCEN) for "willful" and repeated violations of the Bank Secrecy Act. This marks the largest penalty ever imposed on a broker-dealer for such violations. The firm admitted to failing to implement and maintain an adequate AML program and to file suspicious activity reports, despite having been flagged for similar issues and settling allegations with FinCEN in 2018.
Regulators stated that UBS failed to monitor more than 60,000 foreign currency wires totaling over $10 billion between January 2019 and June 2023. These wires often involved high-risk geographic locations, excessive transfers, unusually large dollar amounts, and lacked apparent business purposes. A new automated monitoring tool introduced in February 2021 also reportedly missed approximately one-third of retail foreign-currency-spot activity due to data errors and labeling changes.
In addition to FinCEN's penalty, other regulatory bodies announced their own settlements. The Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) each imposed $20 million fines, while the Commodity Futures Trading Commission (CFTC) added an $8 million penalty. These amounts are credited against the $125 million announced by FinCEN. UBS settled the FINRA and SEC matters without admitting or denying the findings, but admitted to willfully violating the Bank Secrecy Act in its FinCEN consent order.
FinCEN highlighted that the penalty reflects UBS's failure to remedy deficiencies it had promised to address nearly a decade prior. FinCEN Director Andrea Gacki emphasized that this "historic action" sends a clear message that repeat offenders will face severe repercussions, particularly those that expose the financial system to high-risk customers and activities without effective controls. FinCEN also included an incentive, waiving up to $15 million of the costs UBS incurs for a required review and remediation if completed to the agency's satisfaction.
