UBS Settles Repeat AML Violations with US Regulators for $125 Million

Four US financial regulators announced coordinated enforcement actions Monday against UBS Financial Services totaling $125 million for violations of Bank Secrecy Act anti-money laundering and counter-terrorism financing rules.

The Financial Crimes Enforcement Network (FinCEN) imposed the headline penalty of $125 million and agreed to credit payments the firm makes to the other three agencies — the Commodity Futures Trading Commission (CFTC), FINRA, and the Securities and Exchange Commission (SEC) — against that sum. FinCEN's action represents the largest civil money penalty the bureau has ever assessed against a broker-dealer for BSA violations.

The enforcement actions centre on UBS Financial Services' failure to address compliance weaknesses that regulators identified in a December 2018 consent order. That earlier settlement, which carried a $14.5 million fine, cited the firm for willful Bank Secrecy Act violations including an inadequate AML system.

According to FinCEN's consent order, the firm committed several breaches:

• Failed to remediate underlying issues from the 2018 enforcement action
• Did not adequately monitor foreign currency wire transfers
• Withheld disclosure of these deficiencies from FinCEN
• Neglected customer due diligence requirements for high-risk clients with ties to Russia and Latin America

The CFTC will receive an $8 million civil monetary penalty from UBS Financial Services. The derivatives regulator's order requires the firm to cease and desist from further violations of the Commodity Exchange Act and related regulations, settling charges that it failed to diligently supervise AML transaction monitoring systems.

FINRA imposed a $20 million fine after determining the company failed to implement an adequate AML compliance program and did not reasonably execute its customer due diligence obligations. The self-regulatory organisation previously fined UBS Financial Services $14.5 million in December 2018 for insufficient monitoring of foreign currency wires.

The SEC extracted $20 million from the broker-dealer and obtained a cease-and-desist order covering violations of the Securities Exchange Act.

Today's historic action against UBSFS should send a clear message that recidivist financial institutions will face severe repercussions

FinCEN Director Andrea Gacki said in the agency's announcement.

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.

In a statement to PYMNTS, UBS characterised the settlements as resolving a historical issue.

Today's 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 program in line with leading industry practices

the Swiss banking group said.