The US Treasury’s Financial Crimes Enforcement Network has ordered UBS to pay a $125m civil penalty for “wilful” breaches of the Bank Secrecy Act. <\/p>\n
The agency said the sanction is the biggest so far against a broker-dealer for violations of that law. <\/p>\n
It is the second time FinCEN has acted against UBS Financial Services\u202f(UBSFS). <\/p>\n
In December 2018, the firm agreed to a consent order over Bank Secrecy Act failings and paid a $14.5m civil penalty. <\/p>\n
In a statement to Private Banker International, a UBS spokesperson said: “The 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 programme in line with leading industry practices.” <\/p>\n
That earlier order said UBSFS had not properly tracked foreign currency wire transfers because of flaws in its automated surveillance system. <\/p>\n
FinCEN said the company later told the regulator it would fix the problems but did not do so. As a result, more than 50,000 foreign currency wire transfers worth over $10bn were not properly monitored. <\/p>\n
FinCEN said UBSFS also did not report these shortcomings to the regulator. The agency said it uncovered them only during a later investigation opened after a regulatory examination. <\/p>\n
The regulator found that UBS did not meet customer due diligence requirements, especially in business involving higher-risk clients linked to Russia and Latin America. <\/p>\n
FinCEN said its investigation found cases of UBSFS “failing to appropriately consider and mitigate money laundering and other illicit finance risks” tied to the source of wealth of those clients, along with “negative” media reports alleging links to corruption, fraud and money laundering. <\/p>\n
Under the settlement, UBSFS admitted it wilfully breached the Bank Secrecy Act, including by not maintaining an effective anti-money laundering programme and by failing to file suspicious activity reports. <\/p>\n
The Consent Order requires UBSFS to hire a third party to conduct a lookback aimed at identifying and reporting to FinCEN suspicious transactions that were missed because of the failures. <\/p>\n
The firm must also undergo an independent review of its anti-money laundering programme. <\/p>\n
FinCEN worked with the Commodity Futures Trading Commission, the US Securities and Exchange Commission, and the Financial Industry Regulatory Authority. <\/p>\n
According to a Financial Times report earlier this month, UBS is reportedly preparing to pilot day-to-day banking services<\/a> for employees in the US within the coming months with an aim to build a full-service bank for affluent American clients by the middle of next year. <\/p>\n This marks the initial stage of UBS’s effort to broaden its US offering after obtaining a national banking licence<\/a> there earlier this year. <\/p>\n