Swiss banking giant UBS has paid the largest fine ever against a broker-dealer in the US over violations of the Bank Secrecy Act.
UBS subsidiary, UBS Financial Services (UBSFS), has agreed to pay a USD125 million penalty to settle allegations of willful violations of the Bank Secrecy Act (BSA) in the US, according to a statement by the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). This marks the largest-ever fine against a broker-dealer for BSA violations.
BSA authorizes the Department of the Treasury to impose reporting and other requirements on financial institutions and other businesses to help detect and prevent money laundering.
Second action
The fine is FinCEN’s second enforcement action against UBSFS after it paid USD14.5 million in civil penalties in 2018 for failure to adequately monitor foreign currency wires due to weaknesses in its automated system.
Despite reassurances that it would remediate the issues, UBSFS subsequently failed to appropriately monitor over 50,000 foreign currency wires with an aggregate value of more than USD10 billion and did not disclose this to the regulator. The Swiss bank’s subsidiary also failed to comply with its obligations to perform appropriate customer due diligence, particularly in connection with risky clients linked to Russia and Latin America.
As part of its resolution, UBSFS admitted that that it willfully violated the BSA, including failing to implement and maintain an anti-money laundering (AML) program, and file suspicious activity reports.
“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 jeopardise the integrity of our financial system, especially those that expose it to high-risk customers and activities without effective controls.”
UBS considers the US as the most important growth market for its wealth management business. In March, it secured a US banking license with plans to expand its American wealth offering to include payments as well as checking and savings account services.
