WASHINGTON—UBS Financial Services Inc. (UBSFS) has been assessed a $14.5-million penalty by the Financial Crimes Enforcement Network (FinCEN) for Bank Secrecy Act (BSA) violations.
FinCEN found that from 2004 to 2017, UBSFS failed to implement adequate anti-money laundering (AML) and due diligence programs for foreign correspondent accounts.
As described in the assessment, UBSFS failed to develop and implement an appropriate, risk-based anti-money laundering program that adequately addressed the risks associated with accounts that included both traditional brokerage and banking-like services. UBSFS failed to implement appropriate policies and procedures to ensure the detection and reporting of suspicious activity through all accounts—particularly for those accounts that exhibited little to no securities trading. The firm did not adequately structure its AML program to address the use of securities accounts for the purpose of moving funds rather than trading securities, FinCEN stated.
“Broker-dealers providing banking-like services must properly mitigate the AML risks associated with this kind of service. These services enable the flow of funds through mechanisms such as wire transfers, check writing, and ATM withdrawals, creating AML risks that need to be properly addressed,” said FinCEN Director Kenneth A. Blanco in a release. “Although brokerage firms may provide such services to their clients, those doing so need to apply commensurate diligence to ensure that the firm does not become a conduit for movement of illicit funds creating a haven for criminals and other malign actors to benefit from, and to further, their illicit activity. For more than a decade, UBSFS failed to implement sufficient policies and procedures that adequately addressed the risks associated with the products and services it offered.”