UBS hit with $125 million AML penalty in U.S.

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has assessed a $125,000,000 civil money penalty against UBS Financial Services Inc. for violations of the Bank Secrecy Act. FinCEN described this as the largest civil money penalty ever imposed on a broker-dealer for breaches of that law.

Regulators determined that UBS failed to appropriately monitor more than 50,000 foreign currency wire transfers with an aggregate value exceeding $10 billion. These deficiencies in monitoring were not disclosed by the firm, compounding the seriousness of the compliance failures.

The latest action follows a prior penalty of $14.5 million imposed on UBS in 2018 for similar failures in monitoring wire activity. The recurrence of related issues formed part of the basis for the new enforcement measures.

FinCEN found that UBS’s systems did not adequately detect or escalate potentially suspicious foreign currency wire activity. The unmonitored transactions collectively totaled more than $10 billion and involved more than 50,000 individual wires.

The findings indicate that the firm’s controls did not effectively address recognized money-laundering risks associated with cross-border and high-volume wire transfers. The lack of disclosure of these weaknesses to regulators was also cited as a violation.

Under the consent order, UBS Financial Services must retain an independent third party to conduct a lookback review of past transactions. This review is intended to identify suspicious activity that may have gone undetected during the period affected by the monitoring failures.

UBS is also required to commission an independent review of its anti-money-laundering program. This review must focus on priority risks, including narcotics trafficking along the U.S. Southwest border, and activity linked to Iran, Russia, and Venezuela.

FinCEN stated it will waive up to $15 million of UBS’s expenses associated with the lookback and AML program review if the firm completes the remediation to the agency’s satisfaction. This potential waiver is contingent on the quality and effectiveness of the corrective measures.

Alongside FinCEN’s action, other U.S. market regulators announced related settlements with UBS Financial Services. FINRA and the Securities and Exchange Commission each disclosed settlements that include $20 million fines.

The Commodity Futures Trading Commission imposed an additional $8 million penalty. Some reports state that these FINRA, SEC, and CFTC amounts are included in or credited against the $125 million total penalty announced by FinCEN, forming part of a coordinated enforcement package.

Taken together, the actions reinforce heightened regulatory expectations for broker-dealers’ monitoring of wire transfers and the operation of robust AML programs across multiple product lines and regulatory regimes.