FINRA news: UBS Financial fined $20 million for AML failures

The news: FINRA has fined UBS Financial Services Inc. $20 million for anti-money laundering (AML) violations. The regulator found that the firm again failed to set up and carry out an AML program reasonably expected to detect and report suspicious transactions involving foreign currency wires. It also found the firm did not reasonably implement customer due diligence for certain retail customers. UBS Financial settled without admitting or denying the findings.

Why it matters: The case is about repetition. FINRA fined the firm $4.5 million in December 2018 for failing to reasonably monitor foreign currency wires. A later routine examination found that the firm had not fixed the problems, so the deficiencies lasted through June 2023. Bill St. Louis, FINRA’s head of enforcement, said the action reflects “progressive discipline,” which includes escalating sanctions for recidivist misconduct.

The big picture: FINRA described how the monitoring broke down. From January 2019 to January 2021 the firm kept using a legacy system built around a quarterly manual review of a report listing thousands of wires, which did not let reviewers spot suspicious patterns and often lacked key geographic information. An automated tool introduced in February 2021 left out a significant share of activity because of an incomplete data file and a labeling change, omitting roughly 33% of foreign currency wires in retail accounts approved for foreign currency spot activity.

On customer due diligence, FINRA said the firm did not timely detect or investigate risk factors for some retail customers, including ties to higher-risk locations such as Russia, unexplained changes in domicile and employment, adverse media and potential political exposure. As a result, those customers kept lower risk ratings and drew less scrutiny of their money movements.

By the numbers:

• $20 million: the fine
• $4.5 million: the 2018 fine for related conduct
• More than 60,000: wires not reasonably monitored from January 2019 to June 2023
• More than $10 billion: total value of those wires
• About 33%: share of eligible retail foreign currency wires the 2021 tool omitted

What’s next: FINRA pointed firms to Regulatory Notice 19-18, which covers suspicious activity monitoring and reporting under FINRA Rule 3310, and to the AML section of its 2026 Annual Regulatory Oversight Report. FINRA makes disciplinary actions available in its Disciplinary Actions Online database. Firms that rely on rule-based or automated monitoring will want to confirm that data feeds and labels reach the system completely, since the omission in this case came from a data file and a labeling change.