*A story of UBS, ten billion dollars, and the second time they were caught.*
By Jeffrey A. Newman, Esq.MBA with help from ai Claude
There are things that happen by mistake, and there are other things which don’t happen by mistake. The key is to see which one it is when the facts are revealed in the light of day.
The bank made a promise in 2018. It was a simple promise, and it was written down. The regulators had found that UBS Financial Services did not watch its money the way the law said it must. Foreign-currency wires moved through the firm and no one was watching them closely enough as required. That was the finding. The firm paid fourteen and a half million dollars and did not admit much but said it would fix the machine that did the watching. It said it would have a new machine by the middle of 2019. The middle of 2019 came and went. So did the end of it. The new machine did not come until 2021, almost two years late, and when it came, it did not work either.
That seems like the whole story,but it’s not. But the detail is where the money was. and where the truth is revealed.
Between January 2019 and June 2023 the firm failed to monitor more than sixty thousand foreign-currency wires. The wires were worth more than ten and a half billion dollars. The old machine could not see them properly and the new machine, when it finally arrived, missed about a third of the retail traffic because of a bad data file and a change in how things were labeled. A small thing, a label. It let billions go by unseen.
The firm did not tell anyone. It did not call the government and say the machine is broken again. The government found out the way it usually finds out, on an examination, looking through the book. There it was — like a bar of gold sitting right smack in the middle of a street. It was right there.
The people in the background are the interesting part, and the files had people in them.
There was a man who had worked in Russia. His advisor knew this. The advisor knew where the money had likely come from and when the firm wrote down the source of the man’s wealth the Russia part was left off the page. It was simply not there. The man was rated low-risk. More than forty transfers moved through his accounts. No one looked hard until his wife applied for a credit line, a million dollars, and someone finally looked, and a wire turned out to lead to a man under sanctions. That is how it surfaced. It often happens that was–just a series of actions that caue a change in the direction of things happening in time. A loan application. Not the monitoring. Not the machine. Just a single occurence.
There was a professor. He taught, and then in 2014 he moved to Russia, and he was tied to a research institution connected to a man the United States sanctioned in 2018. From a Russian bank account the professor received twenty-three wires. They came to about two and a half million dollars. The firm kept calling him low-risk until 2022, when at last someone reassessed him. By then the wires were old news.
There were others. Customers with money out of Russia and out of Latin America. Politically exposed people. People, an ordinary reader of the newspaper could have flagged, because the bad news about them was printed in the newspaper, and the firm either did not read it, or read it and did nothing. The rule is that you weigh where a client’s money comes from. The firm did not weigh it. Hundreds of transactions that should have been reported as suspicious were never reported at all.
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On a day in August 2026 the government came with the bill.
FinCEN called it the largest penalty it had ever assessed against a broker-dealer. One hundred and twenty-five million dollars. UBS admitted the violations were willful. That word matters. Willful is not an accident. Willful is the firm meaning to do, or not do, the thing it did. The thing they may have thought would never be found.
The other agencies were there too. The SEC took twenty million. FINRA took twenty million. The CFTC took eight. Those were folded into the FinCEN number, credited against it, so the check the firm writes is a hundred and twenty-five million even though the four penalties added together come to a hundred and seventy-three. Either way it is a large number and it is the number for being caught twice.
Andrea Gacki, who runs FinCEN, said the action should send a clear message that recidivist financial institutions will face severe repercussions. Recidivist is the government’s word for a repeat offender. She said repeat violators jeopardize the integrity of the financial system, especially when they open their doors to high-risk customers and keep no real watch. Bill St. Louis at FINRA said firms must design and run programs that can actually monitor for suspicious activity. He said it plainly because it needed saying plainly.
The firm had its own words. A spokesman said the settlement brought closure to this legacy matter. He said the firm had made significant investments to strengthen its program in line with leading industry practices. Legacy. Closure. They are soft words and they were meant to be.
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There is a condition on the paid money. The firm must hire an outside party to go back through the records and find the suspicious transactions it missed. It must let an independent reviewer examine the whole program, with particular attention to the southwest border, to narcotics, and to Iran, Russia, and Venezuela. If the review is done well the government will forgive up to fifteen million of its cost.
So the promise is made again. It looks like the promise from 2018. It is written down, like the last one.
The first time cost fourteen and a half million. The second time cost a hundred and twenty-five. The wires had moved. Ten and a half billion dollars of them, and no one watching, and the machine with a bad label letting a third of it slip past in the dark.
They said they would fix it the first time. This time, again, they say they will.
Jeffrey Newman and his firm represent whistleblowers. His law firm is at www.Jeffnewmanlaw.com 617-823-3217
