E*Trade pays $1m to settle SEC AML charge

E*Trade pays $1m to settle SEC AML charge

Online brokerage E*Trade has agreed to pay $1 million to settle claims that two of its units failed to comply with US anti-money laundering (AML) regulations.

E*Trade Clearing and E*Trade Securities agreed to settle without admitting or denying allegations that they failed to comply with an AML rule that requires broker-dealers to verify the identities of customers and document the procedures for doing so.

According to the SEC, between October 2003 and June 2005 the brokerage failed to accurately document certain customer identification programme (CIP) practices and verify the identities of 65,442 customers as required by the USA Patriot Act as well as its own rules.

E*Trade set up, documented and maintained a CIP that specified that it would verify all accountholders in a joint account but then failed to follow its own verification procedures.

The SEC order finds that E*Trade's compliance failure was "systemic, resulting from lack of a cohesive organisational structure, lack of adequate management oversight, and miscommunications".

Cheryl Scarboro, associate director, enforcement division, SEC, says: "On several occasions, E*Trade personnel discovered and rediscovered its CIP deficiency. However, E*Trade did not initiate any corrective action until the problem resurfaced almost two years after the compliance deadline."

In addition to the $1 million penalty, E*Trade agreed to a censure and to retain a qualified independent compliance consultant to verify the adequacy of its CIP compliance programme.

Says Linda Chatman Thomsen, director, enforcement division, SEC: "E*Trade is one of the largest online brokerage firms in the world, and a compliance lapse of this type has the potential to undermine the nation's anti-terrorism and anti-money laundering efforts."

Comments: (0)

Trending Stories

Featured Job
All Jobs »
London, UK

Sales Director, Private Equity Solutions (London, UK)

Competitive base, double ote, benefits, stock options

22 Jul