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The Swiss finance ministry announced today (Thursday) that UBS has been fined 50,000 Swiss francs ($55,340) for not alerting authorities to suspected money laundering activities. This disclosure coincided with the Danish FSA's revelation that an inspection of a local UBS branch uncovered inadequate Know Your Customer (KYC) procedures.
In Denmark, the wealth management division of UBS was found lacking in its assessment of whether it is relevant to obtain documentation for customers’ assets and the origins of funds for low-risk clients. This finding emerged following a February 20 inspection by the Copenhagen-based FSA.
Switzerland
The fine in Switzerland pertains to a $10 million transfer into an account belonging to Ali Abdullah Saleh, Yemen's former president who died in 2017. Saleh opened a UBS account in 2004, and transactions to this account were scrutinized. The Swiss finance ministry stated that the penalty notice was dated April 4, 2024, and became legally binding after the 30-day objection period expired. However, the notice itself remains unavailable for inspection.
UBS is accused of managing millions of dollars for Saleh. According to SRF Investigativ, the penalty concerned a payment of more than $10 million (CHF9 million) to Saleh in 2009 by the Sultan of Oman, with the cheque being delivered to UBS in Zurich by Saleh’s son. Although this transaction triggered internal alerts at UBS, employees merely noted in an internal dossier: “It is common knowledge that wealthy rulers in the Arab world support their poorer colleagues with such gifts,” instead of contacting the Money Laundering Reporting Office Switzerland (MLROS).
UBS has not yet responded to a request for comment. This case was initially reported by Swiss public broadcaster SRF.
Denmark
The Danish Financial Supervisory Authority conducted an inspection of UBS Europe, Denmark Branch, on February 20. This branch operates under UBS Europe SE, Germany, providing wealth management services for high-net-worth clients, mainly through discretionary portfolio management and investment advisory agreements. The branch has around 100 clients, both private and business.
The Danish FSA evaluated the inherent risk of money laundering at this branch as medium compared to the average for financial companies in Denmark. The inspection focused on the branch's anti-money laundering measures.
The FSA's assessment emphasized that private banking and wealth management carry potentially higher risks due to the involvement of large sums. The inspection revealed several supervisory concerns. The FSA found that the branch did not assess the relevance of obtaining documentation for customers’ assets and the origin of funds for low-risk clients. Consequently, the branch has been ordered to evaluate and, where necessary, gather information about the intended nature of customer relationships, including the origins of funds.
The branch must ensure transactions align with the company’s knowledge of the customer and their business and risk profile. Before the inspection, the branch was not registered in GoAML, the Anti-Money Laundering Secretariat’s notification portal, and therefore did not report directly to the Secretariat. The branch claimed it reported through its parent company. As a result, the branch has been ordered to establish a business procedure to immediately notify the Money Laundering Secretariat if there is suspicion or reasonable grounds to suspect that a transaction, funds, or an activity is linked to money laundering or the financing of terrorism.
By fLEXI tEAM
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