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May 20, 2022


WELLS FARGO ADVISORS TO PAY $7 MILLION OVER ANTI-MONEY LAUNDERING LAPSES: SEC

by Mason Braswell
|
Enforcement, Most Read, News
|
SEC, Wells Fargo
|
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Wells Fargo Advisors has agreed to a censure and to pay $7 million to settle
allegations it failed to properly report potentially suspicious transactions in
customers’ brokerage accounts, the Securities and Exchange Commission announced
on Friday. 

Between April 2017 and October 2021, the St. Louis-based brokerage delayed
filing at least 34 suspicious activity reports (SARs) tied to anti-money
laundering compliance as required by the Bank Secrecy Act, the SEC said. The
transactions involved cases of wire transfers to or from foreign countries and
territories deemed to be at a “high risk or moderate risk for money laundering,
terrorist financing or other illegal monetary movements,” the regulator said. 

“Through this enforcement action, we are not only holding Wells Fargo Advisors
accountable, but also sending a loud and clear message to other registrants that
AML obligations are sacrosanct,” Gurbir S. Grewal, head of the SEC’s enforcement
division, said in a statement. 

The company agreed to the settlement without admitting or denying the findings
and has taken remedial efforts to enhance its monitoring systems, according to
the settlement. 

“At Wells Fargo Advisors, we take regulatory responsibilities seriously,”
spokeswoman Jackie Knolhoff said in a statement. “This matter refers to legacy
issues that impacted a transaction monitoring system and the issues were
resolved promptly upon discovery.”

At least 25 delayed SARs were tied to the broker-dealer’s “deficient
implementation and failure to test” a new monitoring system that was put in
place in 2019. The system used different country codes from Wells Fargo
Advisors’ parent bank and consequently failed to generate alerts on at least
1,708 wire transfers where the codes did not match. 

The SEC said the issue came to light during a routine annual sales practice
review by the Financial Industry Regulatory Authority. (Susan Schroeder, a
former Finra enforcement head who left in 2019 and is a partner at WilmerHale in
New York, represented Wells in the SEC matter.)



Wells in December 2020 identified and notified SEC staff about another issue
that resulted in at least nine other delayed SARs. In those cases, Wells did not
properly process data from the transaction monitoring system in specific
situations, including when there was a bank holiday without a corresponding
brokerage holiday, and failed to generate 658 alerts as a result. 

The transfers that should have prompted SARs ranged from $10,480 to $6.2
million, the SEC said. Some SARs were filed 1,209 days late. Money was sent to
countries and territories identified by regulators as high or moderate risk,
including Costa Rica, Turkey, Honduras, the British Virgin Islands, Antigua,
Cayman Islands, Ukraine, and Guernsey, according to the settlement. 

Under the federal law, broker-dealers must file reports to the U.S. Treasury
Department’s Financial Crimes Enforcement Network on any transactions involving
at least $5,000 that they know or have reason to suspect involved illegal
activity, were designed to evade the law or involved the use of the
broker-dealer to facilitate criminal activity.



The SEC noted it is the second enforcement action with Wells over suspicious
activity report filings in five years. In November 2017, the SEC fined Wells
Fargo Advisors $3.5 million for failing to timely file at least 50 SARs.   

Partly to reduce its anti-money laundering liability, Wells shuttered its
internationally-focused wealth management business last fall saying that it was
“focused on meeting our regulatory requirements, managing risk and simplifying
operations.”

BIG MERRILL TEAMS ON THE MOVE AS ROCKEFELLER, WELLS SCORE IN MD, CA

A $5.4-million team joined Rockefeller in Bethesda, Maryland and a $2-million
team joined Wells Fargo Advisors in Beverly Hills, California.

Apr 29, 2022

In "News"

WELLS FARGO ADVISORS HEAD JIM HAYS TO EXIT IN ANOTHER SHAKE-UP

Hays is retiring effective July 1 and will be replaced by Sol Gindi, CFO of
Wells Fargo’s Wealth and Investment Management division.

May 13, 2022

In "News"

UBS LOOKS TO HANDCUFF $4.1M WELLS FARGO DUO WHO SENT VIDEO MESSAGE TO CLIENTS

Travis Luebbehusen and Melanie Avery, who joined a former UBS colleague’s team
at Wells on March 10, allegedly emailed their clients a video link promising to
be in touch and touting the better resources offered by Wells.

Mar 24, 2022

In "Advisor Moves"

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