Several regulatory agencies are reportedly investigating Morgan Stanley’s wealth management division’s procedures for vetting and monitoring clients potentially involved in money laundering activities.
According to sources cited by The Wall Street Journal (WSJ) on Thursday (April 11), 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 conducting inquiries into the bank’s practices.
While the Federal Reserve’s investigation was previously reported in January, the involvement of other regulators was not previously disclosed, as per the report.
Morgan Stanley declined to comment on the report when contacted by PYMNTS. In January, Morgan Stanley Executive Chairman James Gorman mentioned to WSJ that the bank was investing in compliance, technology, and artificial intelligence (AI) to address regulatory concerns.
The investigations are reportedly focused on Morgan Stanley’s procedures for verifying the identities of potential clients, determining the source of their wealth, and monitoring their financial activities after becoming clients. Some inquiries are specific to certain current and former clients, including individuals with international ties and those flagged by Morgan Stanley’s E*Trade business due to suspicious activities.
Other inquiries are broader, seeking information about the firm’s policies and procedures regarding sanctions and vetting processes.
In a related development, TD Bank disclosed in August 2023 that it was cooperating with regulators and law enforcement agencies regarding its compliance with anti-money laundering (AML) regulations. The bank stated that it was actively working to enhance its AML compliance program in response to formal and informal inquiries from regulatory authorities and law enforcement.
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