Morgan Stanley faces Finra probe on client-vetting: report

[SYDNEY] Morgan Stanley is being probed by the Financial Industry Regulatory Authority (Finra) over its vetting of clients for risk of money laundering, The Wall Street Journal (WSJ) reported.

The scrutiny focuses on the US bank’s clients, risk ranking and other practices from Oct 2021 to Sep 2004, the report said, citing unidentified sources familiar with the matter. Morgan Stanley is already facing potential fines from federal investigations into its anti-money laundering practices, the report said.

Morgan Stanley has been working on fixing its client-screening practices after the US Federal Reserve for years raised concerns about risk-management controls in the firm’s wealth-management unit.

A Morgan Stanley spokesperson said the company has made substantial investments in its anti-money-laundering and other client-vetting programmes over the past several years that are benefiting its business, according to the WSJ report.

Within the probe, Finra has asked for information on US and international customers in the firm’s wealth-management division, as well as in the unit that houses its trading desks, the report said. BLOOMBERG