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.