FinCEN Fines UBS $125mn for BSA Violations

Earlier this week, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) imposed a $125 million penalty on UBS Financial Services Inc. (UBSFS) for willful violations of the Bank Secrecy Act (BSA) and issued a Consent Order requiring remediation.

The penalty is the largest ever imposed against a broker-dealer for BSA violations. “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 jeopardize the integrity of our financial system, especially those that expose it to high-risk customers and activities without effective controls.”

This marks FinCEN’s second enforcement action against UBSFS, following a $14.5 million penalty in December 2018 for weaknesses in its automated monitoring system. Despite assurances that it would remediate the issues, UBSFS subsequently failed to appropriately monitor over 50,000 foreign currency wires worth more than $10 billion, and did not disclose these failings to FinCEN. The firm also failed to conduct adequate customer due diligence for high-risk customers with ties to Russia and Latin America. These and other deficiencies led UBSFS to fail to report hundreds of suspicious transactions in a timely manner.

As part of the resolution, UBSFS admits it willfully violated the BSA. The Consent Order requires the firm to complete a third-party lookback and undergo an independent anti-money laundering (AML) program review focused on risks tied to the U.S. Southwest border, Iran, Russia, and Venezuela. FinCEN will waive up to $15 million of the penalty upon satisfactory completion of the review and implementation of the third party’s recommendations.