The probe targets thousands of US and international accounts across Morgan Stanley’s wealth-management divisions|Marco Verch|CC BY 2.0 DE
The Financial Industry Regulatory Authority (Finra) is investigating whether Morgan Stanley adequately screened clients for money laundering risks between October 2021 and September 2024, reports the Wall Street Journal.
The probe targets thousands of US and international accounts across the bank’s wealth-management divisions, including E*Trade and its private bank. Investigators are concerned that the firm failed to flag high-risk clients.
Finra is also examining the effectiveness of Morgan Stanley’s risk-ranking tool, which reportedly wasn’t activated for E*Trade clients until 2024. Internal concerns have emerged about the accuracy of data submitted to regulators.
Some internal probes found Morgan Stanley may have ignored red flags, such as media reports linking certain clients to criminal activity.
The bank is already facing separate investigations from the Justice and Treasury Departments over its anti-money laundering practices.