UBS Financial Services has been ordered by the Commodity Futures Trading Commission (CFTC) to pay $8m over failures to properly oversee its anti-money laundering (AML) transaction monitoring systems.
The settlement centres on the firm’s supervision of surveillance tools used to monitor wire transfers denominated in foreign currencies (FX). Alongside the civil monetary penalty, the order requires UBS FSI to cease and desist from further breaches of the Commodity Exchange Act and CFTC regulations. The regulator acknowledged the firm’s representations about the remedial steps it has taken.
According to the CFTC’s findings, between January 2019 and June 2023, weaknesses in how UBS FSI configured its surveillance tools and managed its data meant thousands of FX wires moving through retail customer commodity accounts were either inadequately screened or left out of AML monitoring altogether. During part of this window, the firm relied on a manually produced report that missed relevant FX wires and lacked the design needed to spot suspicious patterns in such transactions. The order notes UBS FSI knew about these weaknesses, as they had featured in earlier enforcement actions brought by other government agencies and a self-regulatory organisation.
The firm moved to an automated system in 2021 to screen all wire transactions for suspicious activity. However, the CFTC found UBS FSI did not correctly configure the data feeding into the new platform, undermining the effectiveness of its suspicious activity monitoring.
In parallel, the Financial Crimes Enforcement Network of the US Department of the Treasury, the Securities and Exchange Commission and the Financial Industry Regulatory Authority announced they had filed and settled related actions against UBS FSI on the same day.
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