The Securities and Exchange Commission has levied charges against Wells Fargo Advisors for failing to file at least 34 Suspicious Activity Reports (SARs) in a timely manner between April 2017 and October 2021. Wells Fargo Advisors, the St. Louis-based broker-dealer, has agreed to pay $7 million to settle the charges.
According to the SEC’s order, due to 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, the system failed to reconcile the different country codes used to monitor foreign wire transfers. 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. See SEC Order https://www.sec.gov/litigation/admin/2022/34-94955.pdf
“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.”
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. 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 SARs.
The SEC’s order finds that Wells Fargo Advisors, which is the trade name used by Wells Fargo Clearing Services, LLC, a registered broker-dealer and investment adviser subsidiary of Wells Fargo & Company, violated Section 17(a) of the Securities Exchange Act and Rule 17a-8. 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.
JEFFREY NEWMAN, A FORMER PROSECUTOR, IS A WHISTLEBLOWER LAWYER WITH THE FIRM NEWMAN & SHAPIRO AND HE HANDLES SEC WHISTLEBLOWER CASES AS WELL AS FALSE CLAIMS ACT CASES OF MAJOR FRAUD. HE CAN BE REACHED AT JNEWMAN@NEWMANSHAPIRO.COM OR AT 978-880-4758