Wells Fargo Advisors settles SEC anti-money laundering violation charges for $7 million

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Wells Fargo has come under scrutiny of federal regulators yet again.

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

READ MORE: Where Wells Fargo stands with federal regulators in 2022

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

It’s the second time in five years Wells Fargo Advisors has fallen short on such requirements, the SEC said in its news 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 agreed to pay $3.5 million to settle those charges.

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

Brokers are required by law to file the reports for transactions they suspect might involve fraud or those that lack “an apparent lawful business purpose,” the SEC said.

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

Wells Fargo Advisors did not admit to or deny the findings. It also agreed to a censure — a formal reprimand from the agency — and a cease-and-desist order that essentially orders it 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 other concerns.

Those restrictions include a $1.95 trillion asset cap from the Federal Reserve that prevents the bank from growing 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 provide restitution to affected customers

But the regulator wasn’t satisfied with how Wells Fargo addressed those concerns. Last September, the regulator fined the bank $250 million for “significant deficiencies” in the way it went about paying back customers, among other issues.

In an April 2022 earnings call, Wells Fargo CEO Charlie Scharf told investors the bank has “much more work to do” to satisfy regulatory requirements.

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

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

Wells Fargo became the subject of a class-action lawsuit following a March report from Bloomberg that the bank rejected more Black mortgage refinancing applicants than it accepted in the first year of the pandemic.

The bank called the allegations “unfounded.”

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

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