UBS Group AG was fined €6 million ($7 million) in Monaco over weak anti-money laundering controls, including filing a report 253 days after a suspicious transaction.
The penalty is the first against a global bank by Monaco watchdogs since the city-state was added two years ago to an international "gray list" of jurisdictions deemed insufficiently vigilant about dirty money. As it attempts to shake off the designation, the principality has tightened laws and sought to show that authorities it can take meaningful enforcement action.
In the decision issued last week, UBS Monaco was criticized by the enforcement committee of the Autorité Monégasque de Sécurité Financière over a range of other failings from having too few staff to handle alerts to shortcomings in verifying the origin of certain clients' wealth.
In one instance, UBS took on a new client based on documents the AMSF said were old, mostly in Russian and untranslated. Some were "articles from websites whose reliability is clearly questionable," including one called "Russian mafia," Monaco regulators said.
UBS didn't comment on the specifics of the fining decision, which it said it's reviewing. The bank added that its Monaco unit "is committed to operating to the highest regulatory standards."
Monaco anti-money laundering officials have previously penalized six other firms for deficiencies in recent months but none with global brand like UBS. Still, it's unclear how long it will take to get off the Paris-based Financial Action Task Force's gray list as tentative hopes for an exit earlier this year were dashed.
FATF's recommendations are taken seriously because no nation wants to be flagged for deficiencies that might cast doubt on the integrity of its banking system. Those added to the list require closer monitoring and the designation can make foreign investors more wary of doing business there.
The UBS fine comes after a three-month inspection in 2024 of its offices in Monaco by AMSF officials. They found overall that the bank's local unit didn't fully comply with its know-your-customer obligations, which require businesses to understand where their clients' money comes from.
The 253-day gap in filing a suspicious transaction report relates to a check cashed in September 2022 as part of an investment that the AMSF said immediately raised issues such as an unusual round-trip transfer of €200,000. After seeking explanations from the client, the filing only came in June 2023.
In another example cited in the decision, UBS was blamed for having failed to carry out proper reviews of transactions involving high-risk territories, as required by Monaco law. The bank got an internal alert about a €25 million transfer involving a Cayman Island company but dismissed it without making any checks.
In UBS files, a comment was left: "Consistent with the account's usual activity. Nothing to report."