The Securities and Exchange Commission has charged Wells Fargo Advisors with failing to file at least 34 suspicious activity reports in a timely manner between April 2017 and October 2021. Wells Fargo Advisors, a St. Louis-based broker-dealer, has agreed to pay $7 million to settle the charges.
Broker-dealers are required by the Bank Secrecy Act and other regulations to file suspicious activity reports for transactions they suspect involve fraud or a lack of an apparent lawful business purpose.
Wells Fargo Advisors switched to a new version of its internal anti-money laundering transaction monitoring and alert system in January 2019.
According to the SEC, due to Wells Fargo’s “deficient implementation and failure to test and conduct sufficient monitoring” of the new system, it failed to reconcile the different country codes used to monitor foreign wire transfers.
As a result, the SEC claims that Wells Fargo Advisors did not timely file at least 25 suspicious activity reports related to transactions in its customers’ brokerage accounts involving wire transfers to or from foreign countries that it determined to be at risk for money laundering, terrorist financing, or other illegal money movements.
The order also found that, beginning in April 2017, the firm failed to timely file at least nine additional reports due to a failure to appropriately process wire transfer data into its transaction monitoring system in other situations, including on dates where there was a bank holiday without a corresponding brokerage holiday.
This is the second Bank Secrecy Act action against Wells Fargo Advisors in the last five years. In November 2017, the SEC issued a settled order against Wells Fargo Advisors for failing to timely file at least 50 suspicious activity reports.
“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 [anti-money laundering] obligations are sacrosanct,” Gurbir Grewal, director of the SEC’s enforcement division.
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.