MorganStanley faces a new investigation from Wall Street's top regulator over how thebank screens clients for money laundering risks, adding to the firm'scompliance challenges.Morgan Stanley Under FreshFINRA Scrutiny Over Client Vetting PracticesFINRA is digging intoMorgan Stanley's client vetting procedures, risk rankings, and relatedpractices spanning from October 2021 through September 2024, according to theWall Street Journal. The probe covers both the bank's massive wealth managementdivision, which includes E*Trade,and its institutional securities unit that handles trading operations.Theregulator has been asking for extensive documentation about U.S. andinternational customers across these divisions. FINRA also wants organizationalcharts, reporting structures, and details about Morgan Stanley's internalclient risk-scoring systems.You mayalso like: FINRAFines US Tiger $250K and TradeUP $700K for AML and Communication RetentionIssuesData Quality IssuesSurfaceTheinvestigation hit some bumps early on. Bank employees flagged concerns thatinitial data sent to FINRA was incomplete or contained errors. This forcedMorgan Stanley to submit additional information after regulators pointed outthe gaps.MorganStanley has received at least six data requests from FINRA, including one thatcame through in recent weeks. The volume of information being sought suggestsregulators are taking a comprehensive look at the bank's compliance systems.Bank Defends Its ProgressA MorganStanley spokesperson told the WSJ that the bank "has made significantinvestments in its anti-money-laundering and client-vetting programs,"adding that "such regulatory reviews are not unique to the bank and do notindicate problems with its business or controls".The bankhas been working to address longstanding concerns from the Federal Reserveabout risk management controls in its wealth management unit. Those issues havebeen on regulators' radar for years.Related: MorganStanley Hit With $15 Million SEC Fine Over Client Fund TheftHistory of ComplianceProblemsThis isn'tMorgan Stanley's first run-in with anti-money laundering enforcement. FINRA hitthe bank witha $10 million fine in December 2018 for compliance failures that stretchedover five years.The bank isalso dealing with potential penalties from other federal investigations intoits anti-money laundering practices. Earlier this year, Swiss prosecutors finedMorgan Stanley's local unit $1.1 million over money laundering controls relatedto a Greek bribery scandal.The latestFINRA probe adds regulatory pressure as Morgan Stanley works to clean up itscompliance operations. Neither FINRA nor Morgan Stanley immediately respondedto requests for additional comment beyond what was reported in the Wall StreetJournal.This article was written by Damian Chmiel at www.financemagnates.com.