- The Securities and Exchange Commission (SEC) fined Wells Fargo Advisors $7 million for anti-money laundering violations, the regulator announced Friday.
- The SEC said the Wells Fargo subsidiary failed to file at least 34 suspicious activity reports (SARs) in a timely manner between April 2017 and October.
- The issue with the bank’s transaction monitoring system, which Wells Fargo said it “resolved promptly upon discovery,” comes amid a recent leadership transition in the bank’s $2 trillion wealth and investment management division.
Friday’s settlement is not only aimed at holding the bank accountable, but sends “a loud and clear message to other registrants that AML obligations are sacrosanct,” Gurbir Grewal, director of the SEC’s Division of Enforcement, said in a statement.
"When SEC registrants like Wells Fargo Advisors fail to comply with their AML obligations, they put the investing public at risk because they deprive regulators of timely information about possible money laundering, terrorist financing, or other illegal money movements,” he said.
The SEC said Wells Fargo Advisors failed to properly implement and test a new version of its internal AML transaction monitoring and alert system, which it adopted in January 2019.
As a result, the system failed to timely file at least 25 SARs related to suspicious transactions in its customers’ brokerage accounts involving wire transfers to or from foreign countries that it determined to be at a high or moderate risk for money laundering, terrorist financing or other illegal money movements, the SEC said.
The Wells Fargo subsidiary also failed to timely file at least nine additional SARs due to a failure to appropriately process wire transfer data into its AML transaction monitoring system, according to the SEC.
“At Wells Fargo Advisors, we take regulatory responsibilities seriously,” the bank said in a statement. “This matter refers to legacy issues that impacted a transaction monitoring system and the issues were resolved promptly upon discovery.”
The settlement comes less than two weeks after Wells Fargo named Sol Gindi its new head of Wells Fargo Advisors, replacing Jim Hays who stepped down after serving for nearly three years in the role.
Gindi, a former JPMorgan Chase executive, served as the bank’s chief financial officer for wealth and investment management.
Hays will remain at Wells Fargo over the next few months to ensure an orderly transition, the bank in a statement.
The SEC settlement is the latest charge against the San Francisco-based financial institution, which has faced a series of regulatory penalties stemming from its fake-accounts scandal, which first came to light in 2016.
The Consumer Financial Protection Bureau (CFPB) fined the bank $1 billion in April 2018, and the bank agreed to pay the Justice Department (DOJ) and Securities and Exchange Commission (SEC) $3 billion in February 2020.
Meanwhile, the bank is still operating under a $1.95 trillion asset cap set by the Federal Reserve in 2018.
Friday’s action from the SEC also follows a New York Times report that the bank conducted “fake” job interviews with diverse candidates in order to meet diversity requirements, even after the job had already been offered to another individual.