UBS to pay US$125 million in fines over anti-money laundering violations

UBS Financial Services (UBSFS), a subsidiary of UBS Group, has agreed to pay US$125 million in fines to settle allegations by the US government that it wilfully and repeatedly violated anti-money laundering (AML) rules. 

That amount is the US Treasury Department’s Financial Crimes Enforcement Network’s (FinCen) largest-ever fine against a broker-dealer for Bank Secrecy Act (BSA) violations, and its second enforcement against UBS’ brokerage. 

A 2018 consent decree, for which UBS paid US$14.5 million in civil penalties, said the company failed to sufficiently monitor foreign currency transfers due to poor controls in its automated monitoring system.

UBS did not fix the problem and thus failed to monitor more than 50,000 foreign currency wires totalling more than US$10 billion, FinCen said in a statement.

As part of the latest settlement, UBS admitted that it wilfully violated the BSA, including by not implementing an AML programme or filing suspicious activity reports.  

“Today’s historic action against UBSFS should send a clear message that recidivist financial institutions will face severe repercussions,” FinCen director Andrea Gacki said.

“Financial institutions that continue to violate the BSA jeopardise the integrity of our financial system, especially those that expose it to high-risk customers and activities without effective controls.”

In a statement, a spokesperson for UBS said the announcement closed a “legacy matter” and the bank “has cooperated fully with its regulators and has made significant investments to remediate and strengthen its AML programme, in line with leading industry practices.”

The penalties announced on Monday (Aug 3) also include amounts that will be paid to the Securities and Exchange Commission, the Financial Industry Regulatory Authority and the Commodity Futures Trading Commission. 

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Finra said that between January 2019 and June 2023, UBSFS failed to reasonably monitor foreign currency wires involving high-risk geographic locations, excessive transfers, unusually large dollar amounts and no apparent business purpose. 

The Americas is a key strategic market for UBS, which expects the region to be the global banking unit’s largest source of revenue growth in 2026.

UBS also recently won approval to convert its UBS Bank USA unit to a nationally chartered bank, and it plans to expand its offerings for US wealth clients to include payments and checking and savings account services. BLOOMBERG