The wealth management arm of Morgan Stanley is being probed by the Federal Reserve regarding the controls it has in place to prevent wealthy foreign customers from laundering money, according to a report from the Wall Street Journal.
The Fed is scrutinizing how Morgan Stanley vets foreign customers during onboarding, the report said. The agency has previously found the bank’s due diligence and anti-money laundering (AML) controls to be lacking, according to the report, and has privately reprimanded the bank for not making required changes.
The Fed flagged issues with the bank’s controls for vetting wealthy foreign customers as far back as 2020, according to the report, and gave it a list of issues to address that had not been completed in either 2021 or 2022.
Morgan Stanley’s wealth management business head, Andy Saperstein, is leading the bank’s plan to address the issues, the report said.
The Fed offered no comment. Morgan Stanley did not respond to a request for comment.
The Fed in July fined Deutsche Bank more than $140 million regarding its alleged violations of previous sanctions and AML consent orders agreed to with the agency.