UBS Tells Broker Sales Assistants to Double Down on Vetting New Accounts
In a move that has caused some consternation among UBS’s U.S. brokers and their client sales associates, the firm is telling the assistants to conduct Google searches of new clients or “reinstated” clients in search of potential red flags.
Sales assistants, who help the firm’s more than 6,000 brokers with administrative and client-service tasks and often receive additional compensation from the brokers, were told last week they would have to attest that they conducted “negative news” searches for potentially incriminating information when setting up new accounts, according to multiple sources at the firm who spoke on condition of anonymity.
On Monday, however, the firm dropped the attestation requirement, which employees feared would make the associates liable for know-your-customer and other regulatory requirements that apply to advisors and supervisors. Associates are still being asked to report suspicious findings to managers, a directive that some said could create friction between advisors and associates.
A spokesman for UBS declined to confirm the new policy or discuss why it has been put in place.
Compliance departments generally handle vetting of new clients and run names through rigorous screens before accounts are opened or added. However a due diligence “lite” effort such as Google searches may provide additional protection against brokers who try to get a questionable client though the system, said Brad Bennett, a former chief of enforcement at the Financial Industry Regulatory Authority.
UBS last month agreed to pay $15 million to the Treasury Department, the Securities and Exchange Commission and the Financial Industry Regulatory Authority for failing to have “an appropriate, risk-based anti-money laundering program that adequately addressed the risks associated with accounts” using brokerage and banking services.
“This is a bit belt-and-suspenders,” Bennett said of the Google due diligence, “but it’s the kind of thing you do given the continued focus on AML and the firm’s history with AML.”
The Google directive was made in calls with the client associates led by Diane Frimmel, chief administrative officer of UBS’s U.S. wealth management business, according to one of the sources. She pitched the policy as an an added precaution above the firm’s routine screening to show regulators the it was taking its AML responsibilities seriously, the source said.
Frimmel did not return a call for comment.
The tradeoff between impressing regulators with a relatively rudimentary technique and creating morale issues had some insiders scratching their heads.
“There was large pushback to field leaders,” said one of those leaders, speaking on condition of anonymity. “I don’t want my staff getting in trouble if they miss something or make a bad judgment call.”
Compliance consultants, however, said that given the spate of recent sanctions against firms large and small (Finra last month also fined Morgan Stanley $10 million for AML supervisory lapses), the move is understandable.
“AML right now is a very hot topic,” said Amy Lynch, the founder of Frontline Compliance, a Rockville, Maryland-based consulting firm. “My guess is this is an extra measure taken to make sure they are doing the due diligence on their clients.”
The new screening applies to individuals as well as to accounts associated with foundations, small retirement plan sponsors and other so-called “institutional” clients.