SEC Charges UBS Financial Services Inc. with Anti-Money Laundering Violations
Dec. 17, 2018
File No. 3-18931
December 17, 2018 - The Securities and Exchange Commission today announced settled charges against broker-dealer UBS Financial Services Inc. for failing to report suspicious transactions in customer accounts.
UBS agreed to pay a $5 million civil penalty to resolve the SEC's charges, and separately agreed to pay $10 million to the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) and the Financial Industry Regulatory Authority (FINRA) to resolve parallel charges.
According to the SEC's order, UBS, in addition to offering its customers the ability to buy and sell securities, offered customers with brokerage accounts various bank-like, money transfer services such as wire transfers, journal-entry transfers, and check writing. According to the SEC's order, by offering these additional money transfer services, UBS was susceptible to risks of money laundering and other illicit financial activity associated with these services.
Broker-dealers are required to file Suspicious Activity Reports (SARs) for transactions suspected to involve fraud or with no apparent lawful purpose. According to the SEC, from at least 2011 to 2013, UBS failed to file SARs on certain suspicious movements of funds through its customers' accounts. The order also finds that UBS did not properly review suspicious transactions flagged by its internal monitoring systems and failed to detect suspicious transactions involving the movement of funds between certain accounts in suspicious long-term patterns.
"By failing to file SARs, UBS deprived regulators and law enforcement of critically important information used to investigate potentially serious misconduct," said Michele Wein Layne, Regional Director of the SEC's Los Angeles office.
The SEC's order finds that UBS violated the SAR reporting requirements of Section 17(a) of the Exchange Act and Rule 17a-8 promulgated thereunder, which is a financial recordkeeping and reporting rule. Without admitting or denying the findings in the SEC order except to the extent they appeared in the settlement with FinCEN, UBS agreed to a cease-and-desist order, a censure, and a $5 million civil penalty.
The SEC's investigation was conducted by Michael Buffardi, Solomon R. Mangolini, Janet Rich Weissman and Lynn M. Dean of the Los Angeles Regional Office. The SEC appreciates the assistance of FinCEN and FINRA.