$125 million. That’s the number FinCEN put on UBS Financial Services’ second strike for Bank Secrecy Act violations, and it’s the largest penalty the agency has ever assessed against a broker-dealer. Four regulators piled on at once: FinCEN, the CFTC, FINRA and the SEC all filed settlements the same day, with UBS crediting $48 million paid to the other three agencies against the FinCEN total.
The math traces back to a 2018 consent order that fined UBS just $14.5 million for the same underlying failure: no functioning AML system. UBS told regulators it would fix it. It didn’t. FinCEN says the firm failed to monitor foreign currency wires, didn’t disclose the gap, and skipped due diligence on high-risk customers tied to Russia and Latin America.
The CFTC’s $8 million order fills in the mechanics: thousands of FX wires in retail commodity accounts went unmonitored between January 2019 and June 2023 because UBS never properly configured its surveillance tools. FINRA’s $20 million fine covers the same stretch, on top of the $4.5 million it already collected in 2018.
Recidivism is what turned a mid-eight-figure problem into a nine-figure one. Regulators don’t usually nearly 9x a penalty on a repeat offense unless they’re trying to make an example, and FinCEN Director Andrea Gacki said as much, calling it a message to “recidivist financial institutions.” For a bank the size of UBS, $125 million is a rounding error against annual revenue. The reputational tax of being called a repeat violator by name, in a press release, isn’t.
— Marcus Webb