Today’s Corporate Criminal: UBS

UBS has agreed to pay a $15 million fine after settling with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) over failures within the firm’s anti-money laundering systems (AML) for the last 13 years. Considering that stricter AML rules only came into effect in 2002, UBS apparently has failed to adequately comply with those rules almost since their inception.

The problems with UBS’ AML programs were manifold. It was insufficiently staffed so that alerts were not dealt with and suspicious activity reports (SARs) were not filed in the time-frame required. According to the Wall Street Journal, UBS, “over a period of several years, processed through certain brokerage accounts hundreds of transactions that showed red flags associated with shell-company activity and failed to adequately monitor foreign-currency-denominated wire transfers worth tens of billions of dollars that were conducted through its commodities accounts and retail brokerage accounts”, all of which are indicative of potential money-laundering.

Wire transfers were a particular disaster. UBS’ AML systems did not capture information about the sender and his/her country as well as the receiver and his/her country. Needless to say, some countries are more prone to being hotbeds of money-laundering so knowing the countries involved in a wire transfer is critically important for AML purposes.

Lastly, despite these issue with those AML systems being identified all the way back in 2012, UBS only implemented adequate fixes to those systems in 2017.

Of course, like every other bank, this pathetic fine for a legacy of purposeful dereliction of AML procedures will have no significant negative impact for UBS and the firm will continue with business as usual.