As part of a flurry of moves in the last days of the Biden administration, the Securities and Exchange Commission announced charges against broker/dealer and investment advisor LPL Financial for multiple failures related to its anti-money laundering program.
To resolve the SEC’s charges, LPL agreed to pay a civil penalty of $18 million and to implement improvements to its AML policies and procedures.
According to the SEC order, from at least May 2019 through December 2023, LPL’s customer identification program did not timely close accounts where it had not properly verified customer identities. Furthermore, LPL failed to close or restrict thousands of high-risk accounts, such as cannabis-related and foreign accounts, that were prohibited under LPL’s AML policies.
“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,” Stacy Bogert, associate director of the SEC’s Division of Enforcement, said in a statement. “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.”
The SEC’s order found that LPL willfully violated Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8. Without admitting or denying the SEC’s findings, LPL agreed to a censure and a cease-and-desist order in addition to the $18 million penalty. The SEC’s order also directs LPL to continue its engagement with a compliance consultant to review and recommend changes to the firm’s AML policies and procedures.
Representatives from LPL did not return a request for comment prior to publication.