High risk foreign currency wires catch attention of US Treasury Department

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

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

A 2018 consent decree, for which UBS paid $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 didn’t fix the problem and thus failed to monitor more than 50,000 foreign currency wires totaling more than $10 billion, FinCEN said in a statement.

As part of the latest settlement, UBS admitted that it willfully violated the Bank Secrecy Act, including by not implementing an anti-money laundering program 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, referencing UBS Financial Services Inc. “Financial institutions that continue to violate the BSA jeopardize 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 program in line with leading industry practices.”

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

Finra said that between January 2019 and June 2023, UBS Financial 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.