UBS Financial Services Inc. will pay $5 million to settle charges that its oversight of money laundering risks was inadequate, the Securities and Exchange Commission said Monday.
While the firm did have an anti-money laundering program in place, its parameters for detecting suspicious activity during a certain period "were too narrow under the circumstances," the SEC said.
The charges involve non-resident alien brokerage accounts in a San Diego branch that the SEC said were not adequately screened for money laundering risk from January 2011 through March 2013. At the time, UBS had an average of 300,000 NRA accounts with more than $83 billion moving through them. The San Diego branch was at increased risk for money laundering because its primary business was servicing those types of accounts, with nearly 6,000 such accounts that moved more than $9 billion during the period.
By offering other services, such as wires, internal transfers between accounts, check writing, ATM withdrawals, cash advances and ACH transfers, the firm was susceptible to the risks of money laundering, the SEC said.
"While there is nothing inherently suspicious about NRA customers," there may be an increased money laundering risk from customers engaging in cross-border money movements between high-risk jurisdictions, off-shore shell companies or personal investment companies. Some of the San Diego NRA account holders lived in countries that UBS itself had identified as at increased risk of money laundering, including Mexico, Venezuela, and Panama, the SEC said.
UBS said in a statement that it is pleased to have resolved this matter, which addressed certain legacy anti-money laundering program deficiencies. "UBS remains fully committed to assisting the government in combating money laundering and other illicit activity," the statement said.