Morgan Stanley’s wealth unit caught in AML crossfire
Morgan Stanley’s wealth unit is under the regulatory microscope, with multiple federal agencies scrutinizing its procedures for evaluating the risk of money laundering among clients within its extensive wealth management arm.
Among the regulators investigating the bank’s practices are the Securities and Exchange Commission, the Office of the Comptroller of the Currency, and various offices within the Treasury Department, according to a Wall Street Journal report Thursday.
The inquiry follows an earlier probe by the Federal Reserve, which reportedly is considering supervisory action.
The investigation centers on Morgan Stanley’s diligence in confirming the identities of potential clients and the sources of their wealth. Regulators are also questioning whether it keeps a close-enough eye on the financial transactions of its clients, with an emphasis on its clients from overseas.
James Gorman, the firm’s executive chairman and former CEO, has told the Journal that Morgan Stanley is already taking steps to beef up its compliance and technology to better follow the flow of money within its wealth operations.
Those efforts come after the SEC pressed the firm for details last year on how it vetted specific current and former clients. Those included cases where clients previously rejected for potential red flags by ETrade, which Morgan Stanley acquired in 2020, continued to do business with Morgan Stanley’s financial advisor unit.
The SEC’s list of questionable persons included a billionaire with connections to Russia who was facing sanctions in the UK, and a person whose financial activities suggested discrepancies in their stated US residency and occupation.
The Treasury’s Financial Crimes Enforcement Network and the Office of
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