Morgan Stanley is reportedly facing investigations by several agencies into how its wealth management division vets and monitors clients who may pose money-laundering risks.
The Securities and Exchange Commission (SEC), the Office of the Comptroller of the Currency (OCC), the Financial Crimes Enforcement Network (FinCEN), the Office of Foreign Assets Control (OFAC) and the Federal Reserve are probing the bank, The Wall Street Journal (WSJ) reported Thursday (April 11), citing unnamed sources.
The activity of the Federal Reserve was reported in January, but that of the other regulators was not previously known, according to the report.
Reached by PYMNTS, a Morgan Stanley spokesperson declined to comment on the report.
In January, Morgan Stanley Executive Chairman James Gorman told WSJ the bank was investing in compliance, technology and artificial intelligence (AI) to address issues raised by regulators, per the report.
The agencies’ probes focus on how well Morgan Stanley investigates the identities of potential clients, determines the source of their wealth and monitors their financial activities once they become clients, according to the report.
Some of the inquiries ask about specific current and former clients of the bank’s wealth management division, some of whom are international, the report said.
These clients include a billionaire with ties to Russia who has been sanctioned by the United Kingdom, an individual who had more money in her account than would be typical for someone with the occupation she said she had, and some clients who had been cut off by Morgan Stanley’s E*Trade business because of red flags, per the report.
Other inquiries are more general, asking about the firm’s policies and procedures around sanctions and vetting processes, according to the report.
In an earlier development involving anti-money laundering (AML) practices, TD Bank disclosed in August 2023 that it is cooperating with inquiries from regulators and law enforcement regarding its compliance with AML rules.
TD Bank said at the time in a report to shareholders that it was responding to formal and informal inquiries from regulatory authorities and law enforcement and actively working to enhance its Bank Secrecy Act/anti-money laundering compliance program.
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