UBS Financial Services has been ordered by the Commodity Futures Trading Commission to pay an $8m civil monetary penalty over failures to properly supervise its AML transaction monitoring systems.
The CFTC's order, which settles charges against the firm, centres on wire transfers denominated in foreign currencies (FX) and requires UBS FSI to cease and desist from any further breaches of the Commodity Exchange Act and CFTC regulations. The regulator acknowledged the firm's representations regarding the remediation work it has carried out in relation to the matter.
According to the order, between January 2019 and June 2023, weaknesses in how UBS FSI configured its surveillance tools, combined with poor data governance practices, meant thousands of FX wires moving through retail customer commodity accounts were either inadequately monitored or excluded entirely from AML transaction monitoring.
For part of that period, the firm relied on a manually produced report that missed some relevant FX wires and was not designed to spot patterns of suspicious behaviour in FX wire activity.
The CFTC found that UBS FSI knew about these weaknesses, as they had already featured in earlier enforcement actions brought by other government bodies and a self-regulatory organisation. When the firm moved to an automated monitoring system covering all wire transactions in 2021, it failed to set up the data feeding into that platform correctly, undermining the effectiveness of its suspicious activity monitoring.
The CFTC also confirmed that the Financial Crimes Enforcement Network of the US Department of the Treasury, the Securities and Exchange Commission and the Financial Industry Regulatory Authority have filed and settled related actions against UBS FSI.