The Financial Crimes Enforcement Network assessed a $125 million civil money penalty against UBS Financial Services Inc. for willful violations of the Bank Secrecy Act, according to an Aug. 3 announcement. This is the largest penalty ever imposed against a broker-dealer for such violations.
“Today’s historic action against UBSFS should send a clear message that recidivist financial institutions will face severe repercussions,” said FinCEN Director Andrea Gacki. “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.”
This is FinCEN’s second enforcement action against UBSFS. In December 2018, UBSFS entered into a Consent Order with FinCEN and paid a $14.5 million penalty for similar violations, including inadequate monitoring of foreign currency wires due to weaknesses in its automated systems. Despite assurances from UBSFS that these issues would be remediated, the company failed to address them and did not appropriately monitor over 50,000 foreign currency wires totaling more than $10 billion. The deficiencies were not disclosed by UBSFS but discovered by FinCEN through further investigation after a regulatory examination.
UBSFS also failed to perform appropriate customer due diligence related to high-risk customers with ties to Russia and Latin America. The investigation found failures in considering and mitigating risks associated with customers’ sources of wealth as well as negative news reports about alleged ties to corruption or money laundering—even when concerns were raised by one of its affiliates. These lapses resulted in hundreds of suspicious transactions going unreported.
As part of its resolution with FinCEN, UBSFS admitted it willfully violated the Bank Secrecy Act and agreed to work with a third party on reviewing past transactions and undergo an independent review focused on specific deficiencies in its anti-money laundering program related to priority illicit finance risks such as those connected with Russia, Venezuela, Iran, cartels, and possible narcotics trafficking at the U.S.-Mexico border.
The Financial Crimes Enforcement Network operates under the U.S. Department of the Treasury, coordinating domestic and international efforts against illicit finance; it processes millions of reports annually—including Currency Transaction Reports and Suspicious Activity Reports—and provides intelligence supporting law enforcement actions worldwide, according to the official website.
FinCEN maintains a whistleblower incentive program for individuals providing information leading to successful enforcement actions resulting in monetary penalties exceeding $1 million.