CFTC fines UBS $8 million for FX wire AML lapses

The Commodity Futures Trading Commission fined UBS Financial Services Inc. $8 million and ordered the firm to cease and desist after finding gaps in anti-money-laundering transaction monitoring for foreign-currency wire transfers. The agency found that from January 2019 through June 2023 thousands of FX wires were either not included in surveillance or were insufficiently monitored.

For part of the period, UBS FSI used a manually produced report that did not capture all relevant FX wire activity and was not designed to detect patterns of suspicious transactions in those transfers.

In 2021 the firm moved to an automated monitoring system intended to cover all wire transfers. The CFTC found UBS failed to configure the data inputs to the new system correctly, which reduced the system’s ability to identify suspicious activity.

The order points to weaknesses in surveillance tool settings and in UBS FSI’s data governance practices as the cause of the monitoring gaps. Those deficiencies affected retail customer commodity accounts held by the firm.

Under the settlement UBS FSI must pay an $8 million civil monetary penalty and comply with a cease-and-desist order for violations of the Commodity Exchange Act and CFTC regulations. The CFTC recorded the firm’s representations about steps taken to remediate the problems.

The order also records that UBS FSI had been aware of vulnerabilities in its monitoring approach because similar issues were raised in earlier enforcement proceedings by other regulators and a self-regulatory organization.

On the same day, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network, the Securities and Exchange Commission and the Financial Industry Regulatory Authority announced related settlements addressing overlapping failures in AML controls tied to FX wire monitoring at UBS FSI.

Federal rules require futures commission merchants to supervise the design and operation of systems that detect suspicious transactions, to ensure all relevant transactions feed into monitoring systems, and to maintain data controls. The CFTC’s order enforces those requirements.