CFTC Fines UBS Financial Services $8 Million Over FX Anti-Money Laundering Supervision Failures

The Commodity Futures Trading Commission (CFTC) has issued an order filing and settling charges against UBS Financial Services Inc. (UBS FSI), imposing an $8 million civil monetary penalty. The regulatory action penalizes the registered futures commission merchant for failing to diligently supervise the configuration and operation of its anti-money laundering (AML) transaction monitoring systems for foreign currency (FX) wire transfers. According to the CFTC, the supervisory failures occurred between January 2019 and June 2023. Due to deficiencies in data governance practices and the configuration of surveillance tools, thousands of FX wire transfers moving into or out of retail customer commodity accounts were either omitted from transaction monitoring or insufficiently reviewed for AML compliance. For part of the relevant timeframe, UBS FSI relied on a manually generated reporting process that failed to capture all relevant FX wire transfers and was not tailored to identify suspicious activity patterns. The regulator noted that UBS FSI was already aware of these vulnerabilities, as they had been subject to prior enforcement proceedings by other government bodies and a self-regulatory organization. In 2021, UBS FSI transitioned to an automated system designed to monitor all wire transactions for suspicious activity. However, the firm failed to properly configure the data feeds into the new system, resulting in ongoing issues that undermined the efficacy of its suspicious activity monitoring operations. In addition to the $8 million monetary penalty, UBS FSI must cease and desist from further violations of the Commodity Exchange Act and CFTC regulations. The CFTC acknowledged the firm's representations regarding remediation efforts. The settlement coincides with related enforcement actions announced against UBS FSI by the Financial Crimes Enforcement Network (FinCEN), the Securities and Exchange Commission (SEC), and the Financial Industry Regulatory Authority (FINRA).