Monaco’s financial markets watchdog has fined UBS €6 million for “numerous serious breaches” in anti-money-laundering and counterterrorism financing controls.

In a decision published on its website, the Monegasque Financial Security Authority (AMSF) said “the number and repetition of these shortcomings demonstrate an overall failure in the institution’s compliance and internal control system,” according to SWI swissinfo.ch. The fine, equivalent to about $7 million, marks the first action against a global bank by Monaco’s watchdogs since the principality was added two years ago to an international “gray list” of jurisdictions deemed insufficiently vigilant about dirty money, Bloomberg reported.

Examining the period from 2018 to 2023, the AMSF found delays in the transmission of suspicious transaction reports and in the preparation of UBS Monaco’s global risk assessment. The watchdog determined that the Swiss bank was unable to comply with legal requirements to verify the identity, income, and beneficiaries of its clients, “despite the intrinsic risk presented by its client base, more than half of which is classified as medium to very high risk,” swissinfo.ch reported.

The bank subsidiary also failed to identify the chains of ownership and control of customers with complex structures involving more than three levels between the accountholder and the beneficial owner. The unit also did not corroborate the background of high-risk customers such as politically exposed persons, or check the consistency of certain transactions, the AMSF said.

One suspicious transaction report was filed 253 days after the underlying payment. The payment came in the form of a check cashed in September 2022 as part of an investment that immediately raised issues, including an unusual round-trip transfer of €200,000, but the filing came only in June 2023.

The 77-page verdict also cited several transactional alerts, including two outgoing transfers of $400,000 each to a client’s personal accounts in Lebanon and Saudi Arabia, for which the analysis was limited to the allegedly recurring nature of the transactions. In another instance, an outgoing transfer of €500,000 to a jewelry company owned by a customer was justified on the basis of an invoice for only €73,000.

The UBS affiliate also raised an internal alert about a €25-million transfer involving a Cayman Islands company that was dismissed without checks, with a file note reading: “Consistent with the account’s usual activity. Nothing to report.” 

In another case, UBS took on a new client based on documents the AMSF said were old, mostly in Russian, and untranslated. Some of the documents cited were “articles from websites whose reliability is clearly questionable,” including one called “fuckingsiberia.blogspot.com” and another called “Russian mafia.” 

The client had been flagged in internal UBS emails because he or one of his companies been added to a U.S. sanctions list by the Office of Foreign Assets Control—a fact UBS Switzerland’s Financial Crime Compliance unit had communicated to UBS Monaco in August 2016, advising the Monaco unit to contact the sanctions desk, AMSF said. 

In addition to the financial penalty, the regulator decided to publish the decision on its website in named form for a period of five years. The decision, notified at the end of April, may be appealed within two months, swissinfo.ch said.