The lapses, at Wells Fargo Advisors and Wells Fargo Advisors Financial Network, occurred between 2003 and 2012, according to FINRA, the Wall Street watchdog. Wells Fargo & Co neither admitted nor denied FINRA's allegations, the regulator said.

FINRA rules require brokerages to have policies and procedures in place to comply with a federal law aimed at detecting and curbing money laundering.

A computer system at Wells Fargo, however, contained a design flaw that caused failures in identifying some accounts as new, FINRA said. The problem affected more than 3 percent of the 6.9 million customer accounts the two units had opened during the nine-year period, FINRA said in its settlement with Wells Fargo.

Wells Fargo uncovered the problem through routine compliance testing, according to the settlement document.

A Wells Fargo spokesman declined to comment.

(Reporting by Suzanne Barlyn; Editing by Jeffrey Benkoe; and Peter Galloway)

By Suzanne Barlyn