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Wells Fargo & Company (WFC - Free Report) is under government authorities' investigations on issues related to anti-money laundering (AML) and sanctions programs.
The company did not specify which government entity was investigating its practices, nor did it provide specifics related to the issues under scrutiny.
WFC disclosed this AML and Sanctions program inquiry in its second-quarter Securities and Exchange Commission (SEC) filing. In the same filing, the bank mentioned that it is in “resolution discussions” with the U.S. SEC about an investigation related to the cash sweep options it provides to new investment advisory clients. The bank further added in its SEC filing that, “There can be no assurance as to the outcome of these discussions.”
Although such inquiries and investigations do not always lead to penalties or enforcement actions, they are still major concerns for the bank.
Typically, from late July to early August, the banking sector releases its second-quarter SEC filings. These filings often provide brief details regarding what the banks are expecting in the upcoming period. A subtle difference in language from quarter to quarter provides hints to the investors regarding the long-running issues of the company.
Since September 2016, WFC faced significant challenges with numerous penalties and sanctions, including a cap on the asset position by the Federal Reserve.
Last week, Wells Fargo faced a class action lawsuit alleging that it mismanaged its employee health insurance plan, forcing thousands of U.S.-based employees to overpay for prescription medications. This lawsuit action seeks statutory fines and unspecified damages on behalf of a nationwide class of WFC health plan participants and beneficiaries, which may number in tens of thousands.
In June 2024, WFC faced a proposed class action lawsuit alleging the bank for taking part in a $300-million Ponzi scheme. This scheme affected more than 1,000 investors, mainly senior citizens, and left them without substantial life savings. The lawsuit filed stated that Wells Fargo knew about the fraudulent activities from 2011 to 2021, and the company provided substantial assistance to the perpetrators while reaping benefits from the scam.
Over the past six months, shares of WFC have gained 10.3% compared with the industry’s growth of 12.9%.
Among others, The Toronto-Dominion Bank (TD - Free Report) is one of the banks that has been hit the hardest, with the AML probes. According to a Bloomberg report from June 2024, Jefferies Financial Group has indicated that TD could potentially face fines of up to $4 billion due to allegations of AML violations.
Another big name that had been hit with AML investigation recently was HSBC Holdings’ (HSBC - Free Report) Switzerland branch, HSBC Private Bank (Suisse) SA. In June, Swiss banking supervisory authority FINMA ruled that HSBC Private Bank (Suisse) SA violated money laundering regulations. In a press release, FINMA said that the ruling follows enforcement proceedings opened by it in December 2021, which focused on HSBC’s banking relationships with two unnamed politically exposed people.
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Wells Fargo (WFC) Faces Anti-Money Laundering, Sanctions Probe
Wells Fargo & Company (WFC - Free Report) is under government authorities' investigations on issues related to anti-money laundering (AML) and sanctions programs.
The company did not specify which government entity was investigating its practices, nor did it provide specifics related to the issues under scrutiny.
WFC disclosed this AML and Sanctions program inquiry in its second-quarter Securities and Exchange Commission (SEC) filing. In the same filing, the bank mentioned that it is in “resolution discussions” with the U.S. SEC about an investigation related to the cash sweep options it provides to new investment advisory clients. The bank further added in its SEC filing that, “There can be no assurance as to the outcome of these discussions.”
Although such inquiries and investigations do not always lead to penalties or enforcement actions, they are still major concerns for the bank.
Typically, from late July to early August, the banking sector releases its second-quarter SEC filings. These filings often provide brief details regarding what the banks are expecting in the upcoming period. A subtle difference in language from quarter to quarter provides hints to the investors regarding the long-running issues of the company.
Since September 2016, WFC faced significant challenges with numerous penalties and sanctions, including a cap on the asset position by the Federal Reserve.
Last week, Wells Fargo faced a class action lawsuit alleging that it mismanaged its employee health insurance plan, forcing thousands of U.S.-based employees to overpay for prescription medications. This lawsuit action seeks statutory fines and unspecified damages on behalf of a nationwide class of WFC health plan participants and beneficiaries, which may number in tens of thousands.
In June 2024, WFC faced a proposed class action lawsuit alleging the bank for taking part in a $300-million Ponzi scheme. This scheme affected more than 1,000 investors, mainly senior citizens, and left them without substantial life savings. The lawsuit filed stated that Wells Fargo knew about the fraudulent activities from 2011 to 2021, and the company provided substantial assistance to the perpetrators while reaping benefits from the scam.
Over the past six months, shares of WFC have gained 10.3% compared with the industry’s growth of 12.9%.
Image Source: Zacks Investment Research
Wells Fargo currently carries a Zacks Rank #3 (Hold). You can see see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Banks Facing AML-Related Investigation
Among others, The Toronto-Dominion Bank (TD - Free Report) is one of the banks that has been hit the hardest, with the AML probes. According to a Bloomberg report from June 2024, Jefferies Financial Group has indicated that TD could potentially face fines of up to $4 billion due to allegations of AML violations.
Another big name that had been hit with AML investigation recently was HSBC Holdings’ (HSBC - Free Report) Switzerland branch, HSBC Private Bank (Suisse) SA. In June, Swiss banking supervisory authority FINMA ruled that HSBC Private Bank (Suisse) SA violated money laundering regulations. In a press release, FINMA said that the ruling follows enforcement proceedings opened by it in December 2021, which focused on HSBC’s banking relationships with two unnamed politically exposed people.