Thursday, May 22, 2014

SEC reportedly probing Merrill Lynch for anti-money laundering violations

The U.S. Securities and Exchange Commission is investigating Bank of America Corp's Merrill Lynch brokerage over whether it is doing enough to learn about its clients' identities, sources have told Reuters.

The SEC is also investigating another brokerage, Charles Schwab, in a similar probe, the news outlet reported.

The regulator is looking into whether the brokerages missed red flags that could indicate attempts to move money illicitly or to feed proceeds from drug trafficking and other crimes into the financial system by failing to adequately know their customers, Reuters reported, citing sources.

Reuters, citing sources, reported that the investigation so far has uncovered that Schwab and Merrill accepted shell companies and individuals with fake addresses as clients. In both cases, some of the accounts, whose ownership the brokerages did not adequately investigate, were eventually linked to drug cartels, the sources said.

The investigation is the latest sign that a crackdown on money laundering is expanding, the news outlet reported. The probes are part of an SEC sweep of the brokerage industry to make sure brokerages are not breaking anti-money laundering rules.

Spokesmen for the SEC and Merrill declined to comment. A Schwab spokeswoman said the company does not comment on investigations by regulators but takes its due-diligence responsibilities regarding clients very seriously.

It's unclear what penalties the SEC might seek or whether any individuals or other financial institutions might be charged.


Garth Vader said...

"other crimes in the financial system"

You mean, for example, practically everything they did between 2005 and 2008?