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Wells Fargo Advisors settles for $7M in anti-money laundering case

Wells Fargo Advisors settles for $7M in anti-money laundering case
Wells Fargo Advisors, a subsidiary of Wells Fargo, has agreed to pay a $7 million fine over failing to report suspicious activity involving risk of money laundering. File Photo by Ken Wolter/Shutterstock.com

May 21 (UPI) -- Wells Fargo Advisors has agreed to pay a $7 million fine to settle charges that it failed to comply with an anti-money laundering statute by failing to timely file suspicious activity reports.

The Securities and Exchange Commission announced the charges and settlement on Friday.

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The charges stem from the Wells Fargo subsidiary failing to properly test and implement a new version of its internal anti-money laundering transaction monitoring and alert system adopted in January 2019, according to the SEC's order.

The AML system failed to reconcile different country codes used to monitor foreign wire transfers resulting in the company failing to file at least 25 SARs in a timely manner.

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The 25 reports were "from foreign countries that it determined to be at high or moderate risk for money laundering, terrorist financing or other illegal money movements."

The SEC's order also found that beginning in April 2017, the St. Louis-based broker dealer failed to timely file at least nine additional SARs due to failure to properly process wire transfer data into its AML transaction monitoring system.

"When SEC registrants like Wells Fargo Advisors fail to comply with 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," Gurbir Grewal, director of the SEC's Division of Enforcement said in a statement. "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."

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The SEC order found that Wells Fargo Advisors violated Section 17(a) of the Securities Exchange Act and Rule 17a-8.

Along with agreeing to pay the $7 million penalty, Wells Fargo Advisors agreed to a censure and cease and desist order.

"At Wells Fargo Advisors, we take regulatory responsibilities seriously," the company said in a statement to NBC News. "This matter refers to legacy issues that impacted a transaction monitoring system and the issues were resolved promptly upon discovery."

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In November 2017, the SEC issued a settled order against Wells Fargo Advisors for failing to timely file at least 50 SARs.

In 2016, the parent company, Wells Fargo, based in San Francisco, was subject to a $185 million fine from federal regulators after a widespread scam by some employees who opened millions of bogus accounts to meet quotas and generate sales bonuses.

More recently, The New York Times reported that some current and former employees say Wells Fargo interviewed Black and female candidates after the job had already been filled to promote itself as making more of a diversity effort than it actually was.

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