Security & Fraud

Wells Fargo Settles With SEC Over AML Reporting

Wells Fargo Advisors and the Securities and Exchange Commission (SEC) reached a settlement this week resolving charges that the bank dropped the ball in reporting suspect activities pertaining to money laundering for several years.

According to a MarketWatch report published Tuesday (Nov. 14), though broker-dealers are required to file suspicious activity reports (SARs) to the U.S. Department of Treasury, Wells Fargo failed to do so — or to do it in a timely manner — on 50 or more occasions between March 2012 and June 2013.  

The SEC said in the settlement that 45 of the 50 failures were related to continuing activities, with the majority occurring in accounts that were with Wells Fargo Advisors’ U.S.-based branches and dealt with international clients. While Wells Fargo didn’t admit or deny guilt, it did agree to a cease and desist order, a censure and to pay a penalty of $3.5 million.

Wells Fargo is also required to review and upgrade its policies and procedures centered on reporting suspicious money laundering activities and must train its staff to respond appropriately.

“When confusion over our SAR reporting policies first arose internally, we took immediate steps to conduct an independent review that resulted in process improvements,” a Wells Fargo spokesperson noted in the interview. “We cooperated fully with the SEC’s investigation, and we remain committed to further self-reviews and enhancements that help ensure suspicious activity is disclosed in a timely manner.”

Wells Fargo revealed earlier in November that it is facing lawsuits over scandals in its auto lending and mortgage units. In a regulatory filing, the bank said two of the lawsuits are class action cases alleging it violated federal and state consumer fraud laws.

Former employees have also filed a lawsuit against Wells Fargo, contending they were fired for bringing concerns about sales practices to the company’s attention. The lawsuits were disclosed with Wells Fargo’s recently released third-quarter earnings.  

“The disclosure included in our filing today reflects the company’s continued commitment to transparency,” a Wells Fargo spokesman said in an email to Reuters. “Our top priority is to rebuild trust, and we remain focused on making things right for our customers, team members, community, partners and shareholders.”

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