Wells Fargo Advisors Agrees to Pay $7m to Settle AML Charges

On Friday, The US Securities and Exchange Commission (SEC) said Wells Fargo Advisors, one of the country’s top brokers, has agreed to pay $7 million to settle anti-money laundering-related (AML) charges it filed against the broker.

The St. Louis-based broker-dealer without admitting or denying the SEC’s findings also agreed to a censure and a cease and desist order.

The SEC, which disclosed this information in a press statement, said the move is its second Bank Secrecy Act action against Wells Fargo Advisors in the last five years.

The enforcement action comes three days after the SEC charged Allianz Global Investors US LLC and three former senior portfolio managers with multibillion-dollar securities fraud.

The independent agency said it had brought the charges against Wells Fargo “for failing to file at least 34 Suspicious Activity Reports (SARs) in a timely manner between April 2017 and October 2021.”

The SEC said broker-dealers are required by the Bank Secrecy Act and regulations promulgated by the U.S. Treasury Department’s Financial Crimes Enforcement Network to file SARs for transactions they suspect involve fraud or a lack of an apparent lawful business purpose.

It noted that Wells’ action violated Section 17(a) of the Securities Exchange Act and Rule 17a-8.

The watchdog explained that the broker’s system failed to reconcile the different country codes used to monitor foreign wire transfers.

The SEC attributed this shortcoming to Wells Fargo's poor implementation and failure to test a new version of its internal AML transaction monitoring and alert system adopted in January 2019.

The regulator wrote, “As a result, Wells Fargo Advisors did not 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 order also found that, beginning in 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.”

‘A Loud and Clear Message’

Gurbir Grewal, the Director of SEC’s Division of Enforcement, said the enforcement action is not just holding the broker accountable but also “sending a loud and clear message to other registrants that AML obligations are sacrosanct.”

"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," Grewa explained.

Meanwhile, in April, the SEC charged four individuals for their roles in raising over $10 million through two fraudulent and unregistered digital asset securities offerings.

Earlier in January, the agency disclosed that it was probing into Morgan Stanley and Goldman Sachs’ block trades in collaboration with the US Department of Justice.