Wells Fargo Advisors settles anti-money laundering charges


Wells Fargo Advisors has reached an agreement with the Securities and Exchange Commission for $7 million, the regulator announced Friday. The broker did not timely file a number of reports related to anti-money laundering laws, according to the SEC.

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Wells Fargo has again come under intense scrutiny from federal regulators.

This time it’s Wells Fargo Advisors, which offers investment planning and financial advisory services. The bank’s subsidiary has agreed to pay $7 million to settle Securities and Exchange Commission charges related to anti-money laundering law violations, according to a Friday press release from the SEC.

Wells Fargo Advisors failed to timely file at least 34 suspicious activity reports related to transactions on its clients’ accounts between April 2017 and October 2021, the regulator said.

This is the second time in five years that Wells Fargo Advisors has failed to meet these requirements, the SEC said in its press release. In November 2017, the SEC issued a settled order against Wells Fargo Advisors for failing to timely file at least 50 suspicious activity reports.

Wells Fargo Advisors has agreed to pay $3.5 million to settle these charges.

“We take regulatory responsibilities seriously,” St. Louis-based Wells Fargo Advisors said in a statement to the Charlotte Observer on Monday. He said the recent charges referred to “legacy issues that impacted a transaction monitoring system and the issues were resolved quickly upon discovery.”

Brokers are required by law to file reports for trades they suspect involve fraud or those that have no “apparent legitimate business purpose,” the SEC said.

These kinds of breaches “deprive regulators of timely information about possible money laundering, terrorist financing or other illegal money movements,” said Gurbir Grewal, director of the SEC’s enforcement division, in the press release.

Wells Fargo Advisors neither admitted nor denied the findings. He also accepted a censure — a formal reprimand from the agency — and a cease and desist order that essentially orders him to stop and prevent any future violations.

Other regulatory issues at Wells Fargo

Wells Fargo is still operating under a number of ongoing consent orders from regulators related to its 2016 sales scandal, when employees created millions of fake accounts for customers without their knowledge, and others concerns.

These restrictions include a $1.95 trillion Federal Reserve asset cap that prevents the bank from expanding its balance sheet.

In 2018, the Office of the Comptroller of the Currency accused Wells Fargo of improper mortgage and auto-lending practices that harmed consumers. The OCC ordered the bank to compensate the affected customers

But the regulator was unhappy with how Wells Fargo responded to those concerns. Last September, the regulator fined the bank $250 million for “significant deficiencies” in the way it reimbursed customers, among other issues.

In an April 2022 earnings call, Wells Fargo CEO Charlie Scharf told investors the bank had “a lot more work to do” to meet regulatory requirements.

“We will likely have setbacks,” he said, “but I’m confident in our ability to continue closing the remaining gaps over the next few years.”

The bank is also grappling with allegations of racial discrimination in its home lending practices.

Wells Fargo has been the subject of a class action lawsuit following a March report from Bloomberg that the bank rejected more black mortgage refinance applicants than it accepted in the first year of the pandemic.

The bank called the allegations “unsubstantiated”.

Wells Fargo is based in San Francisco but has its largest employment hub in Charlotte, with around 27,000 workers here. The bank employs over 260,000 people.

This story was originally published May 23, 2022 2:13 p.m.

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Hannah Lang covers banking and economics equity for The Charlotte Observer. She studied business journalism at the University of North Carolina at Chapel Hill and grew up in the same town as her alma mater.