On August 3, 2026, UBS Financial Services Inc. (UBSFS) agreed to a consent order (the 2026 Consent Order) with the Financial Crimes Enforcement Network (FinCEN) for willful violations of the Bank Secrecy Act (BSA), resulting in a $125 million civil penalty – the largest penalty ever imposed against a broker-dealer for BSA violations.¹ The 2026 Consent Order is based largely on UBSFS's failure to implement changes to its anti-money laundering (AML) program after entering into a 2018 consent order (the 2018 Consent Order).

UBSFS entered the 2018 Consent Order for willful violations of the BSA for failing to comply with applicable AML program requirements given various deficiencies and for failing to "conduct ongoing due diligence on correspondent accounts for foreign financial institutions" pursuant to section 312 of the USA PATRIOT Act between 2004 and 2017. According to the 2018 Consent Order, UBSFS's AML program lacked "policies and procedures reasonably expected to detect and cause the reporting of suspicious transactions," its automated transaction monitoring system "failed to sufficiently monitor foreign currency-denominated wire transfers conducted through commodities accounts and retail brokerage accounts," and it failed to hire and retain sufficient AML compliance staff, causing case backlogs and an inability to investigate and timely report suspicious activity. The 2018 Consent Order also found that UBSFS violated its separate statutory requirement to conduct ongoing due diligence on foreign correspondent accounts.

According to the 2026 Consent Order, even after the 2018 Consent Order, UBSFS continued to violate the BSA by willfully failing to implement and maintain a reasonably designed AML program.² Specifically, as part of the 2018 Consent Order, UBSFS agreed to make certain improvements to its foreign currency transaction monitoring systems. Despite these representations, according to FinCEN, UBSFS failed to implement changes to its foreign currency transaction monitoring controls until 2021, resulting in years of transaction monitoring that was manual, untailored, error prone, and, at times, missing monitoring for foreign currency transactions entirely. According to the 2026 Consent Order, this delay was known to UBSFS leadership and was not communicated to FinCEN. Although UBSFS made changes to its program in 2021, the monitoring system only started properly functioning in 2023 after UBSFS engaged a third-party consultant to assist in identifying and remediating the deficiencies. FinCEN noted that many of the issues resulted from poor data management driven by a lack of internal ownership and governance. As a result, for "four years, UBSFS failed to appropriately monitor more than 61,500 foreign currency wires with an aggregate value of more than $10.5 billion." For example, UBSFS utilized an error-ridden code within an Excel spreadsheet to identify certain transactions to review, which caused UBSFS investigators to overlook or miss transactions and customers that presented red flags such as "signs of pass-through activity," "sending wire transfers to 'an unregistered currency exchanger' from high-risk jurisdictions such as Venezuela," and "a beneficial owner [who] was under investigation for money laundering and tax evasion."

According to the 2026 Consent Order, UBSFS also failed to conduct ongoing customer due diligence as required by the BSA. Specifically, FinCEN noted that while UBSFS had policies and procedures governing the due diligence process, in practice, it failed to "appropriately consider, document, and mitigate money-laundering and illicit finance risks" such as source of wealth, adverse media, politically exposed persons (PEPs), and account restrictions. FinCEN said that UBSFS was aware or should have been aware of the heightened money laundering risks associated with certain customer relationships but opened or maintained accounts without sufficient scrutiny and justification of red flags and adequate controls such as risk-rating or restrictions, to mitigate the risks. 

FinCEN noted that UBSFS also violated the BSA by failing to accurately and timely report suspicious transactions to FinCEN.³ FinCEN "identified hundreds of suspicious transactions for which UBSFS failed to timely and accurately file a SAR" involving "tens of millions of dollars" related to transactions by customers who had or were alleged to have engaged in illicit conduct in Russia and Latin America.

As part of the 2026 Consent Order, in addition to the $125 million penalty, UBSFS committed to two primary undertakings. First, it engaged an independent consultant to conduct an SAR lookback review and report to FinCEN and UBSFS, which may result in UBSFS having to file additional SAR reports (the SAR Lookback). Second, UBSFS must hire, with FinCEN's approval and oversight of scope and findings, an independent consultant to conduct a multi-phase review of the effectiveness of the current AML program, focusing on program elements identified by FinCEN (the AML Program Review). For example, FinCEN calls for the AML consultant to conduct testing of high-risk customers, prioritizing customers and transactions with potential ties to "the U.S. Southwest border, cartels, and possible narcotics trafficking" and Iran, Venezuela, and Russia. 

Key Takeaways 

• A Focus on Recidivism and the Importance of Timely Remediation. The 2026 Consent Order provides some guidance for broker-dealers about what FinCEN is looking for in an AML program, but the resolution is largely based on the fact that UBSFS previously agreed to implement major changes to its AML program and then failed to do so for four years. UBSFS's failure was compounded by (i) the widespread knowledge within the company, including at the management level, of the delays and the absence of "mitigating controls," and (ii) that FinCEN only learned of the deficiencies through a follow-up investigation initiated following a regulatory examination. The 2026 Consent Order demonstrates the importance of timely implementation of remediation commitments made in resolutions, and where delays or challenges are presented, communication with regulators is essential. 
• Continued Emphasis on Latin America. The settlement reflects the ongoing emphasis by U.S. enforcement agencies on the role of financial institutions in facilitating narcotrafficking and cartel activity in Latin America, and the importance of robust controls at such institutions in helping combat illicit activities. The 2026 Consent Order and FinCEN's press release place significant emphasis on the risks presented by UBSFS's Latin American customers and transactions through the region. Part of the undertaking requires the broker-dealer's independent consultant to pay particular attention to transactions that may relate to the "border, cartels, and possible narcotics trafficking" and evaluating whether UBSFS maintains and enforces "controls associated with UBSFS's exposure to customers with a nexus to high-risk jurisdictions, including… Latin America." Financial institutions, regardless of whether they operate directly in the region, should analyze whether their controls adequately consider and calibrate to the anti-money laundering risks of transacting with individuals in the region or whose funds derive from operations or accounts in the region. 
• Penalty Credits and Potential Offset. FinCEN agreed to credit $48 million of the $125 million penalty for payments owed to the CFTC, SEC, and FINRA in parallel resolutions. Of the remaining $77 million due to the U.S. Department of the Treasury, FinCEN shall waive UBSFS's obligation to pay up to $15 million for expenses associated with the SAR Lookback and the AML Program Review. While UBSFS must incur the costs and continuing scrutiny and oversight associated with the undertakings, it is incentivized to get it right the second time around, unlike in 2018, as doing so is worth a meaningful reduction in the penalty. 

For more information, please contact:

Ian A. Herbert, iherbert@milchev.com, 202-626-1496

Leah Moushey, lmoushey@milchev.com, 202-626-5896

Therese Kuester, tkuester@milchev.com, 202-626-1462

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¹On the same day, the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), and the Commodity Futures Trading Commission (CFTC) announced that they had entered into parallel agreements with UBSFS for the same conduct. The SEC announced that its cease-and-desist order with UBSFS was for its failure to submit timely Suspicious Activity Reports (SARs) in violation of section 17(a) of the Exchange Act and Rule 17a-8, resulting in a $20 million penalty. FINRA announced that after an examination by FINRA's Department of Member Supervision, UBSFS had violated FINRA Rules 3310(a), 3310(f) and 2010 and would be fined $20 million and be censured as a result. The CFTC announced that it had filed and settled charges with UBSFS as a registered futures commission merchant for its violation of Commission Regulation 166.3 (17 C.F.R. § 166.3) due to the gaps in its AML program related to "transaction monitoring systems for wire transfers that were denominated in foreign currencies and effectuated through retail customer accounts." As a result of the CFTC settlement, UBSFS agreed to pay $8 million. Of the $125 million penalty, FinCEN agreed to credit $48 million of penalties paid to the CFTC, FINRA, and SEC for their parallel enforcement actions, and up to an additional $15 million of the penalty for certain expenses incurred in connection with the undertakings.

²31 U.S.C. § 5318(h), 31 C.F.R. § 1023.210, and 31 C.F.R. § 1026.210.

³31 U.S.C. § 5318(g), 31 C.F.R. § 1023.320, and 31 C.F.R. § 1026.320.