Senator Calls on Wells Fargo to Fix Its Internal Controls and Risk-Management Practices

This week, the chairman of the U.S. Senate Banking Committee, Sherrod Brown, called on Wells Fargo to resolve its governance and risk-management issues, stating that the bank “has been plagued by weaknesses in its governance and risk-management practices for nearly a decade.” It comes after the Securities and Exchange Commission (SEC) charged Wells Fargo Advisors, a subsidiary of Wells Fargo & Company, with $7 million last month for anti money laundering lapses. According to the SEC, Wells Fargo failed to monitor, detect, and report suspicious transactions in customer brokerage accounts regarding wire transfers to and from foreign countries. Sen. Brown further stated that “it is unacceptable that after years of failed attempts, nothing seems to have improved”. 

For institutions such as Wells Fargo, any actual or perceived failure to comply with their AML obligations will inevitably result in increased scrutiny that might hinder their growth. In September 2021, Wells Fargo was fined $250 million for failing to acknowledge long standing problems in its mortgage business. And just this year, in addition to the $7 million fine, a recent report alleged that a former employee claimed that Wells Fargo conducted fake interviews for job applications in order to give an impression that the firm was trying to diversify its workforce. Considering these allegations, the firm's ability to address internal controls, risk management and general governance issues continues to draw questions. And as regulatory scrutiny continues to mount for the industry, particularly in light of the AML Priorities, institutions will need to continue to assess their internal controls and processes before it draws the ire of stakeholders.