UBS Financial fined $14.5 million after more than a decade of BSA violations

UBS Financial Services, Inc. (UBSFS) was assessed a $14.5 million civil money penalty (CMP) over “willful” Bank Secrecy Act/anti-money laundering (BSA/AML) violations under an order announced Monday by Treasury’s Financial Crimes Enforcement Network (FinCEN).

The penalty was assessed in a Dec. 11 FinCEN order produced in coordination with the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA, a private regulatory agency for securities markets). Of the total $14.5 million assessed, $9.5 million will be satisfied through penalties imposed by the SEC and FINRA, with the remaining $5 million to be paid to Treasury, the order says.

The order points to BSA/AML deficiencies dating from 2004 through April 2017. FinCEN notes that, as a full-service broker-dealer, UBSFS is required to establish and implement an AML program and to perform periodic reviews of its correspondent accounts for foreign financial institutions. During the period noted, however, UBSFS failed to implement an adequate AML program and failed to implement an adequate due diligence program for foreign correspondent accounts. It also failed to provide sufficient resources to ensure day-to-day AML compliance.

As described in the order for assessment, 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;
  • failed to implement appropriate policies and procedures to ensure the detection and reporting of  suspicious activity through all accounts – particularly for those accounts that exhibited little to no securities trading; and
  • did not adequately structure its AML program to address the use of securities accounts for the purpose of moving funds rather than trading securities.

“Broker-dealers providing banking-like services must properly mitigate the AML risks associated with this kind of service.  These services enable the flow of funds through mechanisms such as wire transfers, check writing, and ATM withdrawals, creating AML risks that need to be properly addressed,” FinCEN Director Kenneth A. Blanco in in a statement. “… For more than a decade, UBSFS failed to implement sufficient policies and procedures that adequately addressed the risks associated with the products and services it offered.”

While calling UBSFS to task over the violations, FinCEN also acknowledged UBSFS’ efforts to correct its BSA/AML deficiencies. “FinCEN recognizes that UBSFS has made significant investments in BSA/AML staffing and technology, demonstrating its commitment and ability to correct the issues listed in the assessment through significant remedial efforts,” the agency said.

FinCEN Assesses $14.5 Million Penalty against UBS Financial Services for Anti-Money Laundering Failures

CMP order