November 14, 2017 Comments (0) Blog, Securities Fraud

Wells Fargo Advisors Fined $3.5 Million for Reporting Violations

Wells Fargo Advisors
(Last Updated On: November 14, 2017)

SEC Fines Wells Fargo Advisors $3.5 Million for Reporting Violations

The Securities and Exchange Commission imposed a $3.5 million penalty on Wells Fargo Advisors for anti-money-laundering reporting violations on Monday.

The regulator alleges that beginning in March 2012, new managers pressured compliance officials to stop filing suspicious activity reports (SARs) in violation of the Bank Secrecy Act. Wells Fargo agreed to the settlement, without admitting or denying the findings.

The SEC charged the firm with failing to file the reports, or for delaying filings, at least 50 times over 15 months. The majority of the violations reportedly involved accounts at Wells Advisor branches catering to international customers. The failures related to customers who had previously been the subject of suspicious activity reports.

The SEC attributed the problem to a “new senior manager” appointed in March 2012 in Wells Advisors’ compliance department whose responsibilities included the firm’s anti-money laundering program.

According to the SEC’s cease-and-desist order, “Shortly after the arrival of new management, the surveillance and investigations group began receiving conflicting and confusing directions on when and whether to file certain SARs.”

They were reportedly told they were filing too many SARs, and needed proof, rather than suspicions, of illegal activity.

Wells Fargo Advisors’ new compliance management also instructed investigators to avoid documenting “any disagreements with management’s decisions not to file SARs” in the broker-dealer’s internal case management system, the SEC said.

The SEC said that between July 2012 and June 2013, the broker-dealer’s suspicious activity filings plunged by about 60% to an average of 22 per month. Wells Fargo had named a new manager to directly supervise the surveillance and investigations group in July 2012, according to the cease-and-desist letter.

Under the federal law, broker-dealers must file reports to the U.S. Treasury Department’s Financial Crimes Enforcement Network on any transactions involving at least $5,000 that they know or have reason to suspect involved illegal activity, were designed to evade the law or involved the use of the broker-dealer to facilitate criminal activity.

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