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Wells Fargo Advisors fined $7 million as SEC probes failures in money-laundering oversight

The Securities and Exchange Commission accused the subsidiary of failing to file at least 34 suspicious activity reports between April 2017 and October 2021.
A Wells Fargo Advisors office building in Washington, D.C., on Oct. 1, 2020.
A Wells Fargo Advisors office building in Washington, D.C., on Oct. 1, 2020.Graeme Sloan / Sipa USA via AP file

Wells Fargo Advisors, a subsidiary of banking giant Wells Fargo & Company, has agreed to pay $7 million to settle charges that it violated federal anti-money laundering statutes by failing to file suspicious activity reports, the U.S. Securities and Exchange Commission announced Friday.

According to the accusations outlined in an SEC release, the subsidiary failed to properly implement a new version of its internal anti-money laundering, or AML, monitoring and alert system it adopted in January 2019. As a result, it failed to timely file at least 25 suspicious activity reports, some as recently as October 2021, related to wire transfers to or from foreign countries deemed at risk of facilitating "money laundering, terrorist financing, or other illegal money movements," the SEC said.

Wells Fargo Advisors also failed to file at least nine other suspicious activity reports starting in April 2017 after it allegedly failed to appropriately process wire transfer data, the SEC said.

“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,” Gurbir S. 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.”

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

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.

The latest charge adds to the bank's recent history of alleged improprieties. Wells Fargo agreed to pay a total of $185 million in fines in 2016 after it was found to have opened more than 1.5 million checking and savings accounts, as well as 500,000 credit card accounts, without customers' consent. That scandal led to the ouster of former CEO John Stumpf, as well as his successor, Tim Sloan.

In 2019, The Wall Street Journal wrote of Wells Fargo: "Nearly every one of its business lines is under investigation by a government agency, including the Justice Department and the Securities and Exchange Commission."

This week, Wells Fargo was the subject of a New York Times investigation that found it was conducting job interviews to satisfy diversity hiring quotas, even when the job had already been offered to another candidate. A Wells Fargo representative told the newspaper: "To the extent that individual employees are engaging in the behavior as described by The New York Times, we do not tolerate it."