According to reports, a regulatory investigation into Morgan Stanley's money laundering prevention measures is underway.

As per The Wall Street Journal (WSJ) reports, the Financial Industry Regulatory Authority (FINRA) opened an investigation into whether the massive investment banking company properly screened its clients for money laundering threats on Tuesday, July 22.

According to people familiar with the situation, the WSJ was informed that the probe focuses on Morgan Stanley's clients, risk ranking, and other procedures from October 2021 to September 2024. This is in addition to the potential penalties the business may already be facing as a result of a federal multi-agency probe into its anti-money-laundering (AML) activities.

As per the sources, FINRA has been looking for data on both domestic and foreign customers of Morgan Stanley's trading floors and wealth management division. This contains details about prominent foreign politicians, their relatives, or close friends, as well as the Morgan Stanley agents in charge of those accounts.

Although FINRA is not a government organization, the study points out that federal law assigns it the responsibility of monitoring broker-dealers, granting the regulator the power to punish members who violate its regulations. Morgan Stanley has been contacted by PYMNTS for comment, but they have not responded as of yet. According to a Wall Street Journal article from the previous year, Morgan Stanley was being investigated by the Federal Reserve, the Securities and Exchange Commission (SEC), the Office of the Comptroller of the Currency (OCC), the Treasury Department's Financial Crimes Enforcement Network (FinCEN), the Office of Foreign Assets Control (OFAC), and the Office of the Comptroller of the Currency (OCC) to ascertain how well the bank screens its customers.

The Treasury Department declared that it would delay by two years the 2026 implementation of a new anti-money laundering (AML) regulation for investment advisers to 2028. In order to lessen industrial compliance obligations, the delay aims to balance costs and benefits. While recognizing the need for customized restrictions based on different business models and risk profiles, the rule targets criminals and foreign enemies who use the U.S. financial system through investment advisors in order to address illicit finance threats.