(Bloomberg) — Morgan Stanley’s wealth management practice is being scrutinized by the Federal Reserve over lapses tied to doing business with rich clients outside the US, according to the Wall Street Journal.
The bank’s top regulator has been pressing the New York-based firm to improve its processes and controls to prevent wealthy international clients from laundering money. Morgan Stanley’s Andy Saperstein, who’s had oversight of the wealth business, has been meeting Fed officials and promising fixes to rectify the shortcomings, the Journal said.
The Fed has been dissatisfied with the measures taken by the bank and has privately reprimanded the firm to express its dissatisfaction with the remediation efforts. Senior executives across Wall Street have described a phase of higher scrutiny from Washington regulators.
Representatives for Morgan Stanley and the Fed declined to comment.
Separately, rival Goldman Sachs Group Inc. has been responding to its own challenges from the Fed and is seeking to hire hundreds of new compliance staff to help address the deficiencies identified by the central bank, Bloomberg has reported.
At Morgan Stanley, the wealth business is the biggest engine at the firm, responsible for almost half the revenue over the last year. Ted Pick is set to become the next chief executive officer starting in January, replacing longtime chief James Gorman, who spearheaded the bank’s wealth management expansion that has reshaped its identity into a global powerhouse in tending to the fortunes of the wealthy.