Multiple federal agencies on Aug. 3 announced $125 million in fines levied against UBS Financial Services for repeatedly violating the Bank Secrecy Act.
The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) said it fined UBS Financial $125 million for repeatedly failing to properly monitor anti-money laundering (AML) transactions and maintain safeguards designed to prevent terrorist groups from using the U.S. financial system to fund their operations.
The fine, including those by other federal agencies, is the largest penalty ever levied against a broker-dealer for violating the Bank Secrecy Act.
“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 a statement.
“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.”
FinCEN fined UBS Financial $14.5 million in December 2018 for weaknesses in its automated monitoring system that allowed suspicious transactions to go undetected and unreported.
In separate announcements, the Financial Industry Regulatory Authority (FINRA) announced a $20 million fine against UBS Financial for anti-money laundering violations, while the Commodity Futures Trading Commission levied an $8 million fine on the broker-dealer. Those penalties are part of the overall $125 million fine, a UBS spokesperson told The Epoch Times.
According to FINRA, UBS Financial failed to implement an anti-money-laundering compliance program to monitor suspicious transactions. It also failed to flag and report transactions coming from high-risk geographical locations and players, including Russia, Iran, Venezuela, and Mexican drug cartels. The agency fined the firm $4.5 million in December 2018 for failing to properly monitor foreign wire transfers.
Between January 2019 and June 2023, UBS Financial facilitated more than 60,000 foreign currency transactions exceeding $10 billion, FINRA said.
“Member firms operating in global markets bear a responsibility to design and implement AML programs that are tailored to their business model and capable of reasonably monitoring transactions for potentially suspicious activity,” FINRA’s Head of Enforcement and Executive Vice President Bill St. Louis said.
“This action underscores FINRA’s approach to progressive discipline, which includes escalating sanctions for recidivist misconduct.”
Flaws within UBS Financial’s internal systems did not monitor and report red-flag transactions exceeding $5,000 that require a Suspicious Activity Report (SAR) to be filed within 30 days so the Securities and Exchange Commission (SEC) can investigate further, the SEC stated. Although the firm had implemented changes to its legacy AML procedures following its initial SEC fine in 2018, its new monitoring system still did not maintain customer risk profiles and identify and investigate red-flagged transactions, the SEC added.
As part of the resolution with FinCEN, UBS Financial admitted it willfully violated the Bank Secrecy Act by failing to implement an internal anti-money laundering program and file SARs. The company was ordered to work with a third party to review past suspicious foreign currency transactions that went undetected, and undergo a complete review of its anti-money laundering compliance program to pinpoint its weaknesses.
“Today’s announcement brings closure to this legacy matter, a UBS spokesperson said in a statement provided to The Epoch Times.
“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.”
FinCEN said it would waive up to $15 million in fines against UBS Financial for expenses incurred with the third-party evaluation.
