The Securities and Exchange Commission (SEC) announced yesterday, May 20, 2022, that Wells Fargo Clearing Services, LLC (Wells Fargo Advisors), a company formed in Delaware, United States, has been asked to pay $7 million for reported breaches of anti-money laundering regulations.
According to the SEC, the complaint arose out of Wells Fargo Advisors’ reported failure to timely file certain suspicious activity reports (“SARs”) between April 2017 and October 2021. The SEC explained that, due to the deficient implementation and failure to test and conduct sufficient monitoring of the new AML system between January and September 2019, the system did not generate timely alerts for approximately 1,708 brokerage transactions and Wells Fargo Advisors consequently failed to timely surveil or investigate certain suspicious activity related to foreign wire transfers in its customers’ accounts. As a result, Well Fargo Advisors failed to timely file at least 25 SARs related to such activity as required by the Bank Secrecy Act (“BSA”) and willfully violated Section 17(a) of the Exchange Act and Rule 17a-8 thereunder.
In addition, between approximately April 2017 and October 2021, Wells Fargo Advisors reportedly failed to timely file at least nine additional SARs due to the failure to appropriately process wire transfer data into Wells Fargo Advisors’ AML transaction monitoring system in certain additional situations, including on dates on which there was a bank holiday without a corresponding brokerage holiday.
“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,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “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.”
For their reported violations, Wells Fargo Advisors was censured and ordered to cease and desist from committing or causing any violations and any future violations of Section 17(a) of the Exchange Act and Rule 17a-8 promulgated thereunder. Wells Fargo Advisors was also ordered to pay a civil money penalty in the amount of $7,000,000 to the SEC for transfer to the general fund of the United States Treasury within 30 days of the order.
The SEC’s investigation was conducted by Richard Stoltz of the SEC’s Chicago Regional Office and was supervised by Kathryn A. Pyszka and Anne C. McKinley, with assistance from Daniel J. Goldberg, Damon Reed, David Cohen and Andrae S. Eccles of the SEC’s Bank Secrecy Act Review Group. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.