UBS Financial Services Inc., a subsidiary of UBS Group AG, has agreed to pay $125 million to settle allegations by the US government that it willfully and repeatedly violated anti-money laundering (AML) rules. The settlement, announced Tuesday, resolves investigations by the Department of Justice, the Securities and Exchange Commission (SEC), and the Treasury Department.

Prosecutors accused UBS of failing to implement an effective AML program and of willfully disregarding its obligations to report suspicious transactions. According to the DOJ, UBS employees in Switzerland were aware of suspicious activity involving a client who was later convicted of securities fraud, yet the firm did not file a suspicious activity report for approximately 18 months.

The SEC also found that UBS failed to adequately supervise its brokers, allowing a rogue broker to engage in fraudulent trading that harmed investors. The Treasury Department's Financial Crimes Enforcement Network (FinCEN) also imposed a penalty, noting UBS's historical AML deficiencies.

In addition to the fines, UBS has agreed to retain an independent compliance consultant for at least three years to ensure its AML program is robust and effective. The bank has stated it is committed to strengthening its compliance and controls.