On March 30, 2023, the Federal Reserve Board announced that it has fined Wells Fargo & Company $67.8 million for the firm's unsafe or unsound practices relating to historical inadequate oversight of sanctions compliance risks at its subsidiary bank, Wells Fargo Bank, N.A. Wells Fargo & Co.'s deficient oversight enabled the bank to violate U.S. sanctions regulations by providing a trade finance platform to a foreign bank that used the platform to process prohibited transactions.
Wells Fargo & Co. is a registered bank holding company that has a number of separate business lines and legal entities. In 2008 to 2015, the Bank provided a trade finance software platform called Eximbills to a foreign bank, which the foreign bank used to process non-U.S. dollar trade finance instruments outside the U.S. financial system, totaling approximately $532 million, involving parties in jurisdictions subject at the time of the transactions to sanctions regulations imposed under the International Emergency Economic Powers Act. The FRB alleges that Wells Fargo’s risk-management and oversight framework failed to identify and address the legal and compliance risks with respect to the Bank’s provision of Eximbills to the foreign bank, which constituted an unsafe or unsound practice and enabled the Bank to violate OFAC regulations.
In 2015, the Bank self-identified the issue, stopped allowing the foreign bank to process transactions involving parties in jurisdictions subject to OFAC regulations and no longer offers the trading platform to foreign banks, and reported the matter to relevant regulators, including to the Board of Governors and OFAC. However, the FRB has assessed a civil money penalty against Wells Fargo for the unsafe or unsound practices.
Read the FRB’s announcement here.
The Consent Order can be found here.
