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FINRA Fines Wells Fargo $2.25M

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What You Need to Know

  • Two Wells Fargo divisions failed to store about 13 million records related to the firm’s customer identification program in the required format.
  • From 2003 to August 2020, the records were not stored in the “write once, read many” (WORM) format.
  • Records being stored in the customer identification program are a major part of an anti-money laundering program, FINRA says.

The Financial Industry Regulatory Authority has fined two Wells Fargo divisions a combined $2.25 million for failing to store about 13 million records related to the firm’s customer identification program in the required “WORM” format over a 17-year period, according to a FINRA letter of acceptance, waiver and consent that was posted at the industry self-regulator’s website on Monday.

Records being stored in the customer identification program are an “integral part of an anti-money laundering program,” FINRA said.

From 2003 to August 2020, Wells Fargo Clearing Services and Wells Fargo Advisors Financial Network didn’t store the records in the “write once, read many” format, according to FINRA.

The Wells Fargo divisions “first became aware of the issue in November 2016, prior to the execution” of a December 2016 AWC regarding the same issue, “while efforts to remediate their books and records violations were underway,” according to FINRA.

The divisions, however, “did not advise FINRA of the issue when it was discovered, and failed to take steps to fix and remediate this deficiency, or report it to FINRA, for more than three years thereafter,” according to FINRA, noting that the divisions “self-reported the issue” on April 13, 2020.

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The 13 million records pertained to about 8.2 million clients, FINRA said, adding: “The non-WORM compliant platform on which the CIP-related records were stored did not have the required audit system.”

About 4 million of the documents were stored on the non-WORM compliant platform after November 2016, FINRA said.

Without admitting or denying FINRA’s findings, Wells Fargo executives signed the AWC letter Friday, consenting to the $2.25 million fine. FINRA signed the letter Monday.

“At Wells Fargo Advisors we take our regulatory responsibilities seriously and we are pleased to have this issue resolved,” Wells Fargo spokesperson Jackie Knolhoff told ThinkAdvisor on Tuesday.

(Photo: Bloomberg)