Securities Defense Counsel

Includes Repeat Violations Resulting in a Failure to Reasonably Monitor More Than 60,000 Transactions Totaling $10 Billion
WASHINGTONFINRA has fined UBS Financial Services Inc. (UBS Financial) $20 million for anti-money laundering (AML) violations.
FINRA found that UBS Financial again failed to establish and implement an AML compliance program reasonably expected to detect and cause the reporting of suspicious transactions involving foreign currency wires. FINRA also found that UBS Financial did not reasonably implement its customer due diligence program with respect to certain retail customers and failed to timely detect and report suspicious money movements by those customers.
Member firms operating in global markets bear a responsibility to design and implement AML programs that are tailored to their business model and capable of reasonably monitoring transactions for potentially suspicious activity, said Bill St. Louis, Executive Vice President and Head of Enforcement at FINRA. This action underscores FINRAs approach to progressive discipline, which includes escalating sanctions for recidivist misconduct.
In December 2018, FINRA fined UBS Financial $4.5 million for failing to reasonably monitor foreign currency wires, which allow customers to send and receive foreign currency. During a subsequent routine examination of the member firm, FINRA discovered that UBS Financial failed to remediate the foreign currency wire monitoring violations at issue in the 2018 settlement and, as a result, the member firms AML program failures related to foreign currency wires persisted through June 2023.
Between January 2019 and January 2021, UBS Financial continued to use the unreasonable legacy monitoring system that was the subject of the member firms 2018 settlement. This system included a quarterly manual review of a report that contained thousands of foreign currency wires, which did not reasonably allow for the identification of suspicious or unusual patterns and often failed to include material information related to the geographic locations at issue. The member firm implemented an automated transaction monitoring tool in February 2021 which, due to an incomplete data file and labeling change, omitted a significant percentage of the member firms activity. This omitted activity included approximately 33% of foreign currency wires in retail customer accounts approved to engage in foreign currency spot activity.
Between January 2019 and June 2023, UBS Financial failed to reasonably monitor more than 60,000 foreign currency wires totaling more than $10 billion, including wires involving high-risk geographic locations, excessive transfers, unusually large dollar amounts, no apparent business purpose and instances where the member firm previously filed suspicious activity reports for similar activity by the same accounts.
UBS Financial also failed to reasonably implement its customer due diligence program with respect to certain retail customers for which the member firm failed to timely detect and investigate risk factors. These factors included customers connections to higher risk geographic locations, including Russia, unexplained changes in domicile and employment, material adverse media, and potential political exposure. This led UBS Financial to incorrectly assign and maintain lower risk ratings for those customers, resulting in less scrutiny of their transaction activity. As a result, UBS Financial did not detect and report certain suspicious transactions involving money movements.
In settling this matter, UBS Financial accepted and consented to the entry of FINRAs findings, without admitting or denying them.
FINRA is committed to ensuring member firms maintain robust AML programs capable of detecting and preventing money laundering, terrorist financing and other illicit activities that threaten market integrity and investor protection. It provides resources to help member firms comply with AML rules. FINRA Regulatory Notice 19-18 provides guidance to member firms regarding suspicious activity monitoring and reporting obligations under FINRA Rule 3310 (Anti-Money Laundering Compliance Program). In addition, FINRA provides updated guidance and compliance training to member firms about their AML compliance obligations. The 2026 FINRA Annual Regulatory Oversight Report contains information about FINRAs areas of concern related to AML.
FINRA makes available disciplinary actions and other information on its Disciplinary Actions Online database. In addition, FINRA publishes on its Monthly Disciplinary Actions page a summary of disciplinary actions against member firms and individuals for violations of FINRA rules; federal securities laws, rules and regulations; and the rules of the Municipal Securities Rulemaking Board. FINRAs use of fine monies is limited to specific purposes set forth in its public Financial Guiding Principles, which are approved by its Board of Governors. FINRA publicly itemizes and discloses how it uses fine monies each year.

Mark J. Astarita, Esq.

mja

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