FinCEN imposed its largest ever broker-dealer penalty as UBS failed to fix issues from a 2018 order and did not monitor foreign wires or high-risk clients tied to Russia and Latin America.
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Four U.S. regulators reached separate agreements with UBS Financial Services on Monday, with the company agreeing to pay a total of $125 million to settle violations of Bank Secrecy Act anti-money laundering and counter-terrorism financing rules.
UBS settled charges with the Commodity Futures Trading Commission, the Financial Crimes Enforcement Network, FINRA and the Securities and Exchange Commission. FinCEN imposed a $125 million civil money penalty and credited $48 million the company paid to the other three regulators against that total, according to a consent order.
The penalty is the largest FinCEN has ever imposed against a broker-dealer for BSA violations, the regulator said in a press release. FinCEN said UBS failed to remediate issues covered by a December 2018 consent order, did not appropriately monitor foreign currency wires, hid those failures from FinCEN, and did not perform proper customer due diligence on high-risk clients tied to Russia and Latin America.
The 2018 consent order fined UBS $14.5 million for willful BSA violations, including failure to develop an adequate AML system.
“Today’s historic action against UBSFS should send a clear message that recidivist financial institutions will face severe repercussions,” FinCEN Director Andrea Gacki said in the release. “Repeat violators of the Bank Secrecy Act jeopardize the integrity of our financial system, especially those that expose it to high-risk customers and activities without effective controls.”
The CFTC fined UBS $8 million for failing to supervise its AML transaction monitoring systems, the CFTC said in its own release. The order settles charges that the company violated the Commodity Exchange Act and CFTC regulations.
FINRA fined UBS $20 million for AML violations after finding the company failed to implement an adequate AML compliance program and did not reasonably carry out its customer due diligence program. FINRA had previously fined UBS $14.5 million in December 2018 for failing to reasonably monitor foreign currency wires.
The SEC said in an administrative proceeding that UBS will pay $20 million and cease and desist from causing any violations of the Securities Exchange Act.
UBS said in an emailed statement: “Today’s announcement brings closure to this legacy matter. UBS has cooperated fully with its regulators and has made significant investments to remediate and strengthen its AML program in line with leading industry practices.”
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