Even though human beings are by far the smartest species our world has ever seen, we do have our fair share of limitations. Talk about these limitations, they have popped up in various different disguises over the years. In fact, at times, their appearances have also left an indelible mark on our lives, therefore forcing us to look for a foolproof defence mechanism. After much searching, we’ll find one when we bring dedicated regulatory bodies into the fold. The move was a legitimate game-changer, as it helped the world in becoming protected in such a manner that we didn’t even know was possible. However, the boost was pretty short-lived, and if we are being honest, it was all technology’s fault. You see, technology’s layered nature made it dramatically easier for the rule breakers to hide their unscrupulous activities. This new dynamic ended up destabilizing our entire spectrum, but fortunately enough for us, there was another power shift to come, and we are now witnessing it in full flow. Wells Fargo’s latest settlement emerges as a major example of the same.
A Wells Fargo & Co. unit has formally reached a settlement with Securities and Exchange Commission in relation to a case that accused the branch of non-compliance with the commission’s anti-money laundering obligations. According to certain reports, Wells Fargo Advisors, the branch responsible for the bank’s brokerage services, failed to implement, and consequentially, test the new version of a system which was design to spot money laundering incidents. This, as a result, kept the unit from reporting questionable activities in time. If some of the further details are to be believed, Wells Fargo Advisor failed to share a whopping 34 reports between April 2017 and October 2021.
“When SEC registrants like Wells Fargo Advisors fail to comply with their [anti-money-laundering] 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,” said Gurbir Grewal, SEC Enforcement Director.
In case you are not aware, banks, brokers, and basically all the businesses undertaking money-handling activities are required to file SARs to inform government agencies about potentially suspicious transactions. However, Wells Fargo’s dodgy system ensured the company’s failure in fulfilling the stated obligation. Assessing it on a more granular level, it was the issue around cross-referencing country codes used for wire transfers that did a lot in not triggering the all-important alerts. In fact, this problem alone was the reason why 25 of the total reports weren’t filed within the required timeframe. Apart from it, the company couldn’t file the remaining 9 reports due to system malfunction on certain days.
This isn’t Wells Fargo’s first run-in with SEC over money laundering. In 2017, the commission accused the company of a similar misconduct. The whole encounter actually led to significant changes in internal policies employed at Wells Fargo.
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