Morgan Stanley is currently under investigation by the Financial Industry Regulatory Authority (FINRA) due to potential lapses in anti-money laundering (AML) controls related to its wealthy clientele.
FINRA Investigation
FINRA is probing whether Morgan Stanley appropriately assessed client risk and adhered to AML procedures within its Wealth and Institutional Business departments. The authority has requested information regarding clients from October 2021 to September 2024.
Client Risk Issues
Sources indicate that the investigation involves units like Wealth Management and Institutional Securities. FINRA is seeking data concerning politically exposed persons (PEPs) and how Morgan Stanley employees managed clients exposed to money laundering vulnerabilities due to political ties. In April 2024, it was reported that the bank faced various federal investigations regarding potential corruption and drug trafficking dealings.
Employee Concerns Over Data Requests
Morgan Stanley has received at least six information requests from FINRA, and many employees within the bank are reportedly concerned about the completeness and accuracy of the submitted responses. In at least one instance, the firm had to provide additional data after the initial submissions were found lacking. A bank spokesperson noted that significant investments have been made in compliance programs.
The investigation underscores potential weaknesses in Morgan Stanley's AML system and highlights the regulatory importance of maintaining standards to prevent money laundering, raising growing concerns both within the bank and among regulators.
