LPL Financial Resolves SEC’s Charges for Anti-Money Laundering Violations
The Securities and Exchange Commission (SEC) swooped in once again to investigate Anti-Money Laundering violations in companies that think they’re being slick.
On January 17, the SEC announced several charges against the broker-dealer and investment adviser, LPL Financial LLC, for failures associated with its AML program. To resolve the SEC’s charges, LPL agreed to pay a civil penalty of $18 million and to improve its AML policies and procedures.
The SEC order states that from approximately May 2019 to December 2023, LPL had persistent failures in its customer identification program subject to the AML’s “Know Your Customer” (“KYC”) requirements. This included failing to close accounts in a timely manner when the customer’s identity was not properly verified. Additionally, LPL did not close or restrict thousands of high-risk accounts, including those related to cannabis or foreign entities, which were prohibited under its AML policies.
Marlene Koury, partner at Constantine Cannon, said: “Persistent failures in KYC compliance are at the heart of many whistleblower cases we file, as regulators continue to crack down on firms that fail to meet their obligations.”
Stacy Bogert, Associate Director of the SEC’s Division of Enforcement, said: “Federal law requires broker-dealers to ascertain the identity of their customers and to conduct ongoing customer due diligence to aid the government in its efforts to detect and prevent money laundering. When broker-dealers like LPL fail to comply with their AML obligations, they put the securities markets at risk. Today’s case underscores the importance of complying with applicable regulations in the areas of customer identification and ongoing customer due diligence.”
According to the SEC’s order, the LPL willfully violated Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8 (Financial Recordkeeping and Reporting of Currency and Foreign Transactions). The firm neither admitted nor denied what the SEC found and agreed to pay a $18 million penalty. It additionally agreed to a censure and a cease-and-desist order. SEC’s order directed LPL to continue to engage a compliance consultant to review and recommend changes to the firm’s AML policies and procedures.
As a whistleblower, you may be eligible for rewards associated with reporting violations of AML laws and regulations. If you believe you have information on AML violations or want to learn more about what it means to be a whistleblower, please contact us. We will connect you with an experienced member of the Constantine Cannon whistleblower team for a free and confidential consult.
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