FinCEN, FINRA and the CFTC penalize UBS $153M for anti-money laundering failures in its wealth management division from 2019 to 2023, including deficient foreign wire monitoring and customer due diligence.
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Three U.S. regulators hit UBS Financial Services with a combined $153 million in fines Monday, citing years of anti-money laundering failures in its wealth management division. The penalties from FinCEN, FINRA and the Commodity Futures Trading Commission stem from problems with foreign-currency wire monitoring and customer due diligence that stretched from January 2019 through June 2023.
FinCEN, the Treasury Department’s financial crimes unit, levied a $125 million civil penalty – its largest ever – after ruling that UBS willfully violated the Bank Secrecy Act. The bank’s wealth management arm admitted it failed to maintain an adequate AML program and file suspicious activity reports, according to the FinCEN order. Director Andrea Gacki said the action should send a signal to "recidivist financial institutions" that they will face severe repercussions.
The fine follows a 2018 FinCEN penalty of $14.5 million that UBS also failed to fully resolve. This time, FinCEN found the bank did not "remediate the underlying issues" and fell short on monitoring more than 50,000 foreign-currency wires worth over $10 billion. The regulator also cited failures in due diligence on high-risk customers with ties to Russia and Latin America.
As part of the settlement, UBS must hire a third party to conduct a "lookback" to identify and report any suspicious transactions that went undetected. If the bank completes that process, FinCEN will waive up to $15 million of the fine to cover costs.
FINRA separately fined UBS $20 million, an escalation from a $4.5 million penalty in 2018 that the bank allegedly failed to remediate again, the regulator said. FINRA’s Bill St. Louis said member firms have a responsibility to design AML programs "tailored to their business model" that can reasonably monitor transactions. The regulator wrote that UBS used an unreasonable legacy monitoring system through January 2021, relying on quarterly manual reviews of thousands of foreign-currency wires, and incorrectly assigned lower risk ratings to certain retail customers connected to higher-risk geographies including Russia.
The CFTC added an $8 million penalty for what it called a failure to "diligently supervise the configuration and operation" of AML transaction monitoring systems for foreign-currency wire transfers.
A UBS spokesperson said the bank has cooperated fully and made "significant investments to remediate and strengthen its AML program."
The FINRA action against UBS came months after the regulator fined RBC Capital Markets $275,000 and Sanctuary Securities $150,000 for similar AML lapses.
Last week, UBS announced a $3 billion share buyback program in its second-quarter earnings report, citing better-than-expected wealth management assets and a surge in trading revenue.
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