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.