Wells Fargo Advisors fined $7 million after deficient deployment of AML solution

Rick Steves

Wells Fargo Advisors’ deficient implementation and failure to test a new version of its internal anti-money laundering (AML) transaction monitoring and alert system adopted in January 2019 are behind the system’s failure to reconcile the different country codes used to monitor foreign wire transfers, according to the SEC. 

The Securities and Exchange Commission has charged Wells Fargo Advisors for failing to file at least 34 Suspicious Activity Reports (SARs) in a timely manner between April 2017 and October 2021. The St. Louis-based broker-dealer has agreed to pay $7 million to settle the charges.

This is the second Bank Secrecy Act action against Wells Fargo Advisors in the last five years after having settled a 2017 order against the same firm for failing to timely file at least 50 SARs. Broker-dealers are required to file SARs for transactions they suspect involve fraud or a lack of an apparent lawful business purpose.

Deficient deployment and testing of new AML monitoring solution

Wells Fargo Advisors’ deficient implementation and failure to test a new version of its internal anti-money laundering (AML) transaction monitoring and alert system adopted in January 2019 are behind the system’s failure to reconcile the different country codes used to monitor foreign wire transfers, according to the SEC.

Such failure has resulted in an untimely filing of at least 25 SARs related to suspicious transactions in its customers’ brokerage accounts, according to the complaint, which added that transactions involved wire transfers to or from foreign countries that were determined to be at a high or moderate risk for money laundering, terrorist financing, or other illegal money movements.

Since April 2017, Wells Fargo Advisors 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 in certain other situations.

“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. 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”, said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.

Wells Fargo Advisors is the trade name used by Wells Fargo Clearing Services, LLC, a registered broker-dealer and investment adviser subsidiary of Wells Fargo & Company.

In addition to the $7 million penalty, Wells Fargo Advisors, without admitting or denying the SEC’s findings, agreed to a censure and a cease and desist order.

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