The decision affects a number of accounts with links to Venezuela’s government or to Petroleos de Venezuela SA, the state-owned oil company, according to people familiar with the decision. It comes after the bank conducted an in-depth review and decided some relationships didn’t warrant the compliance risks, the people said, asking not to be identified in disclosing internal information.
At least 17 U.S.-based advisers with Venezuelan customers have left UBS in the past nine months, according to the people and publicly available documents. Those that remain are being asked to step up their due diligence on Venezuelan clients and their funds, the people said.
UBS declined to comment.
Banks are increasing their compliance efforts after paying billions of dollars over the past years for violating U.S. sanctions or running afoul of anti-money laundering laws. Venezuela has become a particular concern after the Trump administration in April escalated measures against the country’s oil industry in an effort to encourage regime change. Last month, Switzerland followed other European countries in imposing sanctions on 11 Venezuelan officials.
UBS manages an estimated $2 billion to $3 billion in assets for rich Venezuelans from the U.S., one of the people said, a relatively minor amount compared with the rest of its Latin American business. A small number of customers from the Latin American country are booked in Switzerland, said one of the people. Those accounts are not being closed.
UBS doesn’t publicly disclose how much wealth it manages for Latin Americans, but in a 2018 presentation to investors it put the figure at 108 billion francs ($118 billion). The bank has seen an increase in new money from the region in recent months as clients sought the perceived safety of a Swiss firm amid the volatility caused by the coronavirus pandemic, Bloomberg reported previously.
Latin America is a fertile market for offshore wealth managers, but it’s also caused headaches at some firms. Earlier this year, Swiss regulator Finma blasted rival bank Julius Baer Group Ltd. for failing to do more to prevent money laundering in its Latin American business. In 2018, one of Baer’s former bankers was sentenced to 10 years in prison for his role in laundering money that was stolen from PDVSA, the oil company.
At UBS, several of the advisers who left the bank were based in the Miami branch, a popular hub for serving Latin America’s richest. Seven of them, who together managed just over $1 billion in Latin American client assets, moved to Raymond James Financial Inc., according to company press releases.
“Raymond James has appropriate cross-border policies to protect clients, advisers and the firm,” a spokesperson for the firm said. “We maintain enhanced AML and supervisory controls over our offshore business, which are heightened for certain countries, including specialized policies and due diligence processes for clients with ties to Venezuela.”