UBS Financial Services Inc.
UBS Financial Services Inc. (UBS Financial) was fined $20 million for anti-money laundering (AML) violations in repeatedly failing to establish and implement an AML compliance program reasonably expected to detect and cause the reporting of suspicious transactions involving foreign currency wires, resulting in a failure to reasonably monitor more than 60,000 transactions totaling $10 billion. UBS Financial also did not reasonably implement its customer due diligence program with respect to certain retail customers and failed to timely detect and report suspicious money movements by those customers.
In December 2018, FINRA fined UBS Financial $4.5 million for failing to reasonably monitor foreign currency wires, which allow customers to send and receive foreign currency. During a subsequent routine examination of the member firm, FINRA discovered that UBS Financial failed to remediate the foreign currency wire monitoring violations at issue in the 2018 settlement and, as a result, the member firm’s AML program failures related to foreign currency wires persisted through June 2023.
Between January 2019 and January 2021, UBS Financial continued to use the unreasonable legacy monitoring system that was the subject of the member firm’s 2018 settlement. This system included a quarterly manual review of a report that contained thousands of foreign currency wires, which did not reasonably allow for the identification of suspicious or unusual patterns and often failed to include material information related to the geographic locations at issue. The member firm implemented an automated transaction monitoring tool in February 2021 which, due to an incomplete data file and labeling change, omitted a significant percentage of the member firm’s activity. This omitted activity included approximately 33% of foreign currency wires in retail customer accounts approved to engage in foreign currency spot activity.
Between January 2019 and June 2023, UBS Financial failed to reasonably monitor more than 60,000 foreign currency wires totaling more than $10 billion, including wires involving high-risk geographic locations, excessive transfers, unusually large dollar amounts, no apparent business purpose and instances where the member firm previously filed suspicious activity reports for similar activity by the same accounts.
UBS Financial also failed to reasonably implement its customer due diligence program with respect to certain retail customers for which the member firm failed to timely detect and investigate risk factors. These factors included customers’ connections to higher risk geographic locations, including Russia, unexplained changes in domicile and employment, material adverse media, and potential political exposure. This led UBS Financial to incorrectly assign and maintain lower risk ratings for those customers, resulting in less scrutiny of their transaction activity. As a result, UBS Financial did not detect and report certain suspicious transactions involving money movements.
