FinCEN Targets Broker-Dealers With $14.5M Anti-Money Laundering Fine Against UBS Financial Services

On December 17th, 2018, the Financial Crimes Enforcement Network (FinCEN) announced a $14.5 million penalty against UBS Financial Services, Inc. (UBSFS) for willful violations of the Bank Secrecy Act related to its Anti-Money Laundering (“AML”) program. This penalty marks increased pressure on broker-dealers that provide banking-like services for AML.

The assessment explains that UBSFS did not adequately develop and maintain a risk-based AML program that addressed the risks associated with the services provided by the broker. “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” said the FinCEN press release. More specifically, the release called out the lack of detection and reporting for accounts that exhibited little to no securities trading. The services that some broker-dealers provide that create particularly high AML risk are wire transfers, check writing, and ATM withdrawals.

The clear message to broker-dealers is that the services they are providing are conducive to illegal activity and that they need to develop better AML programs or face regulatory action. “Broker dealers providing banking-like services must properly mitigate AML risks associated with this kind of service,” said FinCEN director Kenneth A. Blanco. “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.”

FinCEN Press Release