Source: Financial News Agency Author: Xia Junxiong

According to media reports citing sources, Morgan Stanley's wealth department has been investigated by several US federal regulators, and financial regulators are examining how the bank can prevent its high-net-worth customers from engaging in money laundering activities.

Affected by this news,$Morgan Stanley (MS.US)$Shares plummeted more than 5% on Thursday.

According to people familiar with the matter, the US Securities and Exchange Commission (SEC), the US Treasury's Office of Monetary Affairs (OCC), and other Treasury agencies all participated in the investigation of Morgan Stanley's wealth department. According to media reports in November last year, the Federal Reserve carried out a similar investigation into Morgan Stanley.

The main concerns of regulators boil down to whether Morgan Stanley has fully investigated the identity of potential customers and their sources of wealth, and how to monitor clients' financial activities. According to reports, some of the investigations mainly target the bank's international customers.

The SEC sent Morgan Stanley a list of current and former users last year and questioned how the bank censors these customers. It also questioned why Morgan Stanley's financial advisory department (dealing directly with wealthy people) did business with some clients who were cut off by Morgan Stanley's digital trading platform E*Trade due to red flags.

The US Treasury's Financial Crimes Enforcement Administration (FinCEN) also sent Morgan Stanley a list of customers, which partially overlaps with the SEC's list.

Morgan Stanley also received an administrative subpoena from the US Treasury's Office of Foreign Assets Control (OFAC) requesting information on the bank's sanctions policies and procedures.

OCC issued so-called customer due diligence reminders to Morgan Stanley at the end of last year. According to reports, the OCC previously carried out an annual inspection of Morgan Stanley's anti-money laundering and related projects, and the bank submitted a detailed action plan to the supervisory authorities.

The SEC and FinCEN are closely monitoring the differences in the review process between Morgan Stanley's financial advisory department and e*Trade. They have been asking Morgan Stanley how it compared E*Trade's technology and review procedures to its own before deciding to replace most of E*Trade's programs with its own.

edit/lambor