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Bank of America Fined $1.2B for Money Laundering Failures
Confirmed
In Short: UBS Financial Services has been fined $145 million by U.S. regulators for anti-money laundering (AML) failures, with the Financial Crimes Enforcement Network (FinCEN) imposing a $125 million civil money penalty and the Financial Industry Regulatory Authority (FINRA) adding a $20 million fine.
The penalties stem from weaknesses in UBS Financial’s transaction monitoring, customer due diligence, and suspicious activity reporting, according to Traders Magazine.
FinCEN Director Andrea Gacki emphasized the severity of the action against UBSFS, stating, “Today’s historic action against UBSFS should send a clear message that recidivist financial institutions will face severe repercussions.”
UBS Financial was found to have failed to appropriately assess and mitigate risks associated with certain high-risk customers, including those with ties to Russia and Latin America.
Separately, American Express has been fined $350 million by U.S. regulators for extensive flaws in its monitoring and reporting systems, which hindered its ability to identify and report approximately $13 billion in suspicious transactions over a decade.
According to Arise, the OCC identified deficiencies in American Express’s procedures for confirming customers’ identities and carrying out due diligence checks.
American Express CEO Stephen Squeri acknowledged the bank’s progress in strengthening controls but noted that further efforts were needed to address the identified issues.
Bill St. Louis, Executive Vice President and Head of Enforcement at FINRA, highlighted the responsibility of member firms to design and implement AML programs tailored to their business model and capable of monitoring transactions for potentially suspicious activity.
A UBS spokesperson stated, “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.”
Both UBS and American Express have been penalized for AML failures, with UBS facing a combined $145 million fine and American Express hit with a $350 million fine.
Background
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What's confirmed
- The penalties stem from weaknesses in UBS Financial’s transaction monitoring, customer due diligence, and suspicious activity reporting, according to Traders Magazine.
- UBS Financial was found to have failed to appropriately assess and mitigate risks associated with certain high-risk customers, including those with ties to Russia and Latin America.
- Separately, American Express has been fined $350 million by U.S. regulators for extensive flaws in its monitoring and reporting systems, which hindered its ability to identify and report approximately $13 billion in suspicious transactions over a decade.
- According to Arise, the OCC identified deficiencies in American Express’s procedures for confirming customers’ identities and carrying out due diligence checks.
- American Express CEO Stephen Squeri acknowledged the bank’s progress in strengthening controls but noted that further efforts were needed to address the identified issues.
- Bill St. Louis, Executive Vice President and Head of Enforcement at FINRA, highlighted the responsibility of member firms to design and implement AML programs tailored to their business model and capable of monitoring transactions for potentially suspicious activity.
- Both UBS and American Express have been penalized for AML failures, with UBS facing a combined $145 million fine and American Express hit with a $350 million fine.
What's still developing
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- The Financial Crimes Enforcement Network (FinCEN) assessed a $125 million civil money penalty against UBS Financial for willful violations of the Bank Secrecy Act (BSA), marking the largest penalty imposed against a broker-dealer for BSA violations to date.
- “Onboarding programs receive the most attention and tooling. But a client’s risk profile is set at inception and then rarely re-underwritten with the same rigor, even as source-of-wealth questions, adverse media or ownership changes accumulate,” he said.
- The agency said UBS Financial did not sufficiently evaluate factors including source of wealth concerns, adverse media reports and potential links to corruption, fraud and money laundering.
- The regulator cited failures involving customers’ connections to higher-risk jurisdictions, unexplained changes in domicile and employment, adverse media and potential political exposure.
- “Event-driven review is typically where most compliance programs are weakest and it’s the hardest failure to catch because on the surface, everything looks like it’s working,” Nadig told Traders Magazine.
- The regulators said American Express, particularly its national bank, had failed to establish and maintain an effective anti-money laundering compliance programme.
- The penalty followed findings by US banking authorities that the company’s procedures for identifying and reporting suspected money laundering were insufficient, potentially leaving about $13 billion in suspicious transactions undetected over the past decade.
- Comptroller of the Currency Jonathan Gould said financial institutions operating at American Express’s scale and level of complexity must dedicate sufficient resources to meeting anti-money laundering obligations.