UBS Financial paying $15M for AML failures
FinCEN has issued an assessment order against UBS Financial Services, Inc., in the amount of $14.5 million, of which $9.5 million will be satisfied through payment of penalties imposed by the Securities and Exchange Commission ($5 million) and FINRA ($5 million), a self-regulatory organization delegated authority by the SEC for examining its member firms. As a full-service broker-dealer, UBSFS offers securities and commodities brokerage services; investment products and advisory services; portfolio management products and services; and execution and clearance services for transactions originated by individual investors. UBSFS reported total assets of more than $17 billion for the year ending December 31, 2017. UBSFS is a wholly-owned subsidiary of UBS Americas Inc., which is an indirect subsidiary of UBS Group AG.
FinCEN has determined that, from 2004 through April 2017, UBSFS willfully violated anti-money laundering (AML) program requirements and willfully violated the requirement under Section 312 of the USA PATRIOT Act to conduct ongoing due diligence on correspondent accounts for foreign financial institutions. FinCEN found that, during the time period described above, UBSFS failed to develop and implement an appropriate, risk-based AML program that adequately addressed the risks associated with accounts that included both traditional brokerage and banking-like services. UBSFS failed to implement appropriate policies and procedures to ensure the detection and reporting of suspicious activity through all accounts—particularly for those accounts through which funds were moved but that exhibited little to no securities trading. In addition, due to weaknesses in its automated monitoring system, UBSFS failed to adequately monitor foreign currency-denominated wire transfers conducted through commodities accounts and retail brokerage accounts. UBSFS also failed to hire and retain sufficient AML compliance staff to meet its obligations under the BSA. As a result of insufficient staffing, the Firm had a backlog of cases, which hindered its ability to investigate and report suspicious activity in a timely manner. Finally, UBSFS also violated its statutory requirement to conduct ongoing due diligence on foreign correspondent accounts.