FinCEN Hits UBS With Record $125 Million Penalty as Regulators Cite Repeat AML Failures

Key Takeaways

• Coordinated Enforcement: FinCEN, the SEC, the CFTC, and FINRA announced coordinated enforcement actions over UBS Financial Services Inc.'s anti-money laundering compliance failures. Under FinCEN's consent order, payments made under the related agency settlements are credited against FinCEN's $125 million civil money penalty rather than added to it.
• Record FinCEN Penalty: FinCEN assessed a $125 million civil money penalty, the largest ever imposed against a broker-dealer for Bank Secrecy Act violations, after concluding UBSFS failed to remediate deficiencies identified in its 2018 enforcement action.
• Years of Monitoring Failures: FinCEN found UBSFS failed to appropriately monitor more than 61,500 foreign currency wire transfers totaling more than $10.5 billion, while FINRA separately found the firm failed to reasonably monitor more than 60,000 foreign currency wire transactions totaling more than $10 billion.
• Customer Due Diligence Breakdowns: Multiple regulators cited deficiencies in UBSFS's risk-based customer due diligence program, including failures to adequately assess higher-risk customers, maintain current risk profiles, and timely report suspicious activity.
• Independent Remediation Required: FinCEN's settlement requires UBSFS to complete an independent transaction lookback and AML program review, with up to $15 million of the remaining penalty eligible for waiver if the firm successfully completes the required remediation.

Deep Dive

Eight years after promising regulators it would fix persistent weaknesses in its anti-money laundering controls, UBS is paying for what those regulators say it failed to finish. Federal regulators, joined by the Financial Industry Regulatory Authority, announced coordinated enforcement actions Monday concluding that deficiencies identified years earlier continued to undermine transaction monitoring, customer due diligence, and suspicious activity reporting. The actions were brought by the Treasury Department's Financial Crimes Enforcement Network (FinCEN), the Securities and Exchange Commission, the Commodity Futures Trading Commission, and FINRA.

FinCEN assessed a $125 million civil money penalty, the largest ever imposed against a broker-dealer for violations of the Bank Secrecy Act. Although the SEC, CFTC, and FINRA each announced related settlements carrying their own monetary sanctions, FinCEN's consent order credits those payments against its assessment rather than adding them to the firm's total financial obligation.

This was not a case built around a newly discovered weakness or an unexpected compliance failure. According to FinCEN, UBSFS already knew where its anti-money laundering program had fallen short. Regulators had already identified the deficiencies in a 2018 enforcement action, and the firm had assured them they would be addressed.

Instead, FinCEN concluded the problems lingered for years. The agency found that UBSFS failed to implement and maintain a reasonably designed anti-money laundering program, leaving more than 61,500 foreign currency wire transfers totaling more than $10.5 billion inadequately monitored during the period from January 2019 through June 2023. According to the consent order, many of the same weaknesses cited in the 2018 action, including flawed transaction monitoring, delayed implementation of an upgraded surveillance system, and inadequate data governance, remained unresolved long after the firm had committed to correcting them.  

FinCEN also concluded that UBSFS failed to notify the agency when promised remediation efforts fell behind schedule. Instead, the agency said it learned of the continuing deficiencies only after opening a follow-up investigation.

"Today's historic action against UBSFS should send a clear message that recidivist financial institutions will face severe repercussions," FinCEN Director Andrea Gacki said in announcing the enforcement action.

The shortcomings extended beyond transaction monitoring. FinCEN found UBSFS repeatedly failed to maintain meaningful risk-based customer due diligence for certain higher-risk clients, particularly customers with ties to Russia and Latin America. Investigators cited instances in which the firm inadequately evaluated customers' sources of wealth, discounted adverse media reports alleging corruption or money laundering, failed to appropriately assess politically exposed persons, and neglected to apply or enforce enhanced controls even after identifying elevated risks.

Those failures had practical consequences. According to FinCEN, UBSFS failed to timely and accurately file hundreds of Suspicious Activity Reports involving tens of millions of dollars in suspicious transactions, depriving law enforcement of information used to investigate money laundering, corruption, fraud, sanctions evasion, and other illicit financial activity.

The settlement leaves little room for ambiguity. UBSFS admitted the facts set out in FinCEN's consent order and admitted that it willfully violated the Bank Secrecy Act by failing to maintain an effective anti-money laundering program and by failing to timely report suspicious activity.

One Compliance Failure, Four Enforcement Actions

Although each agency approached the matter under a different statutory framework, the findings point in much the same direction. FinCEN focused on violations of the Bank Secrecy Act, concluding UBSFS failed to remediate deficiencies identified in its 2018 consent order and allowed critical weaknesses in transaction monitoring and customer due diligence to persist for years.

FINRA reached a similar conclusion under its broker-dealer oversight authority, finding the firm failed to remediate deficiencies identified in its prior disciplinary action and continued to inadequately monitor foreign currency wire activity between 2019 and 2023, including more than 60,000 foreign currency wire transfers totaling more than $10 billion.

The CFTC viewed the matter through the lens of supervisory responsibility, concluding UBSFS failed to diligently supervise the configuration and operation of its anti-money laundering transaction monitoring systems for foreign currency wire transfers conducted through futures commission merchant accounts. The SEC, meanwhile, determined that the firm's monitoring failures and weaknesses in customer due diligence resulted in delayed Suspicious Activity Report filings, violating federal securities laws requiring broker-dealers to comply with Bank Secrecy Act reporting obligations.

While the enforcement actions were announced separately, the financial resolution was coordinated. FinCEN's consent order provides that the $20 million FINRA fine, $20 million SEC civil penalty, and $8 million CFTC civil monetary penalty are credited against FinCEN's $125 million civil money penalty. Under the agreement, UBSFS will pay $62 million immediately to the U.S. Treasury, while the remaining $15 million is due by May 31, 2028. FinCEN may waive some or all of that remaining amount if UBSFS successfully completes the required independent review of its anti-money laundering program and implements the resulting recommendations.

The remediation requirements are almost as significant as the financial penalty. FinCEN ordered UBSFS to retain an independent consultant to conduct a comprehensive transaction lookback to identify suspicious activity that may have gone undetected because of the firm's monitoring failures. A separate independent review will evaluate the effectiveness of the firm's anti-money laundering program, with particular attention to risks involving the U.S. Southwest border and narcotics trafficking, Iran, Russia, and Venezuela.

The agency's approach reflects an enforcement philosophy that extends beyond financial penalties. Rather than simply imposing a record fine, FinCEN structured the settlement to require independent validation that the weaknesses identified over multiple enforcement actions have actually been addressed.

In a statement, a UBS spokesperson said, "Today's announcement brings closure to this legacy matter. UBS has cooperated fully with its regulators and has made significant investments to remediate and strengthen its AML program in line with leading industry practices."

Correction (August 4, 2026): An earlier version of this article incorrectly stated that UBS Financial Services faced a combined $173 million in penalties. While the SEC, CFTC, and FINRA announced related settlements, FinCEN's consent order credits those payments against its $125 million civil money penalty. The article has been updated to accurately reflect the settlement structure and to include a statement from UBS.

‍The GRC Report is your premier destination for the latest in governance, risk, and compliance news. As your reliable source for comprehensive coverage, we ensure you stay informed and ready to navigate the dynamic landscape of GRC. Beyond being a news source, the GRC Report represents a thriving community of professionals who, like you, are dedicated to GRC excellence. Explore our insightful articles and breaking news, and actively participate in the conversation to enhance your GRC journey.