May 24, 2022 Connor Steens



A release by the Securities and Exchange Commission (SEC) on the 20th of May 2022 details a $7 million fine against Wells Fargo Advisors, alleging the firm fell short on its AML obligations when it failed to file reports identifying suspicious transactions.

The firm failed to file at least 34 suspicious activity reports between April 2017 and October 2021. Prior to 2019, Wells Fargo’s AML transaction monitoring system would catalogue international wire transfer activity by cross-referencing country codes to categorize the transfers. In January of 2019 Wells Fargo switched to an updated version of its AML monitoring system which failed to properly cross-reference the codes for 58 high and moderate-risk countries, as such the system could not produce alerts for transfers involving those countries.

Although the error was uncovered in September of 2019, during that time the system failed to produce alerts for an estimated 1,708 wire transfers. An internal Wells Fargo investigation resulted in the firm filing at least 25, late Suspicious Activity Reports (SARs), with dollar values ranging from $29,980 to $2.5 million with several late reports relating to potential money laundering between multiple accounts with “no business or apparent lawful purpose” according to the SEC order.

Later in 2019, the firm uncovered further errors in its AML system, finding that from April 2017 to May 2019 there were an estimated 658 alerts that were not generated, with transaction amounts ranging from $10,480 to $6.2 million.

The charges and $7 million fine send a message to other registrants that “AML obligations are sacrosanct,” according to the SEC Enforcement Division Director, “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”.

Connor Steens

Connor Steens works as an Analyst at Southpac Group. Connor has worked closely with Guy on investment an banking relationships. Connor currently oversees and monitors current marketing analytics, exposure and direction, content creation and market presence.
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