December 17, 2018

Broker-dealer settles allegations that it failed to report suspicious activity

In parallel actions, the Financial Crimes Enforcement Network, the Securities and Exchange Commission, and the Financial Industry Regulatory Authority have assessed a $15 million total fine against two UBS affiliates for alleged deficiencies in their anti-money laundering programs.  Each agency will collect $5 million.  The SEC alleged that the broker-dealer did not have an AML program reasonably designed to account for money laundering risks associated with services offered to its non-resident alien (NRA) retail brokerage clients.  The SEC further alleged that the San Diego branch office did not adequately monitor for, detect, and report suspicious activity occurring in NRA accounts in violation of Section 17(a) of the Exchange Act.  The Commission stated that it considered the broker-dealer’s substantial remedial acts in rendering the fine, including enhancing its surveillance system; training and minimum standards for monitoring staff; alert handling, documentation and tracking; and quality assurance processes.  FINRA announced that it imposed a $5 million total fine against the broker-dealer for failing to establish and implement anti-money laundering programs reasonably designed to monitor foreign currency and penny stock transactions in customer accounts to and from high-risk countries.  For its part, FinCEN’s $5 million assessment pertained to the conduct criticized by both the SEC and FINRA, which, it alleged, violated the Bank Secrecy Act and its implementing regulations.  FinCEN also recognized the broker-dealer’s significant investments to remediate its AML program.

SEC order | FinCEN press release | FINRA press release