Regulator Fines E-Trade Units $1 Million

The independent Financial Industry Regulatory Authority has fined two units of E-Trade Financial a total of US$1 million for failing to implement adequate anti-money laundering (AML) procedures between Jan. 1, 2003 and May 31, 2007.

Under FINRA guidelines, brokerage firms' AML procedures must have a number of components, including "monitoring the trading in customer accounts as well as the flow of money into and out of these accounts," FINRA said in a statement Friday.

E-Trade did not have "separate and distinct monitoring procedures for suspicious trading activity in the absence of money movement," according to FINRA.

Instead, E-Trade analysts and other workers tracked suspect trades manually, and did not have "sufficient automated tools," FINRA said.

An E-Trade spokeswoman said via e-mail Friday that the company "has upgraded its systems to provide an automated method to monitor for this particular activity, and those systems have been in place for over a year."

E-Trade "promptly corrected the concern when FINRA advised the firm of its position," she added.

To comment on this article and other PCWorld content, visit our Facebook page or our Twitter feed.
Shop Tech Products at Amazon