SEC fines Wells Fargo Advisors $3.5 million

Firm's anti-money-laundering unit failed to file timely Suspicious Activity Reports, regulator says

Nov 13, 2017 @ 2:08 pm

By InvestmentNews

Without admitting or denying the SEC's findings about its failure to submit timely reports of suspicious money movements, Wells Fargo Advisors has consented to a cease-and-desist order, a censure, and a civil penalty of $3.5 million.

The firm said it also will "undertake to review and update its policies and procedures and develop and conduct additional training" in connection with its compliance efforts in the area of money laundering prevention, detection and reporting.

(More: Merrill Lynch fined $45.5 million for failing to report trades.)

In an administrative proceeding, the Securities and Exchange Commission said that St. Louis-based Wells Fargo Advisors agreed to settle charges that it failed to file or file in a timely manner at least 50 Suspicious Activity Reports, 45 of which related to continuing activity, between approximately March 2012 and June 2013. Most of these failures occurred in accounts held at Wells Fargo Advisors' U.S. branch offices that focused on international customers, the SEC said.

According to the SEC's order, starting around March 2012, new managers of the firm's anti-money-laundering program created confusion by telling the firm's Suspicious Activity Report investigators that they were filing too many SARs; that continuing activity SAR reviews were not a regulatory requirement; that they were to take steps to eliminate further continuing activity reviews; and that filing a SAR required "proof" of illegal activity.

These statements, said the SEC, created an environment in which the SAR investigators experienced difficulty in recommending and filing SARs, especially continuing activity SARs. Ultimately, Wells Fargo Advisors' total SAR filings dropped by about 60% during an 11-month period, according to the SEC.

(More: Broker says she was fired for raising red flag about a wealthy client.)


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