Wells Fargo fined $2.25m over client data storage failures
By Daniel Gil 08 Dec, 2021
The Financial Industry Regulatory Authority (Finra) has hit Wells Fargo with a $2.25m fine for failing to properly maintain records of its customers and business dealings stretching back nearly two decades.
From 2003 to August 2020, Finra found that Wells Fargo Clearing Services and Wells Fargo Advisors Financial Network violated a slew of book and record-keeping requirements by failing to maintain more than 13m client records related to its customer identification program (CIP), according to a filing from the market watchdog published on Monday.
The client records in question, which Finra described as ‘an integral part of anti-money laundering’, were also not stored in the required non-erasable and non-writable ‘write once, read many’ (Worm) format as required by Finra, according to the filing.
The group consented to Finra’s findings, submitting a letter of acceptance, waiver and consent in which Wells Fargo neither admitted to nor denied its alleged record-keeping and supervisory failures.
Both Wells Fargo units were previously hit with a $1.5m fine in December 2016 for the same issue which, at the time, included the improper storage of one million client accounts.
According to Finra, the group was made aware of the issues in November 2016 and ‘failed to take steps to fix and remediate [the deficiencies] or report it to Finra for more than three years,’ the filing said.
Finra added Wells Fargo had made some remedial efforts in 2016 prior to its initial sanctioning over its client record-keeping issues but did not inform the watchdog that records weren’t being stored using the Worm process until April 2020.
Broker-dealer firms are required by Finra to establish, document and maintain CIPs to verify client identities pursuant to federal anti-money laundering relations and must also include detailed descriptions of how client information is maintained.
‘At Wells Fargo Advisors we take our regulatory responsibilities seriously and we are pleased to have this issue resolved,’ the company said.
