According to the SEC, E.S. Financial worked with non-U.S. citizens as if
they were their own customers, yet did not have adequate customer identification
programs to verify their identities.
On February 4, 2016, the U.S. Securities and Exchange Commission
announced that Brickell Global Markets (formerly E.S. Financial Services) agreed to pay $1 million to settle
charges that it violated anti-money laundering regulations. According
to the SEC, E.S. Financial allowed foreign entities to buy and sell securities
without first checking identities.
All financial institutions are required by law to have functioning customer
identification programs (CIPs). Verifying the identities of customers
helps financial institutions prevent aiding money laundering schemes,
and even terrorism.
Upon investigation, the SEC discovered that E.S. Financial’s CIP
did not obtain or maintain documentation that would verify identities
of foreign customers – specifically, customers who bought and sold
through a Central American bank’s brokerage account.
E.S. Financial worked with non-U.S. citizens without verifying their identities,
even though this type of verification is required by federal anti-money
In addition to the $1 million fine, E.S. Financial also agreed to have
an independent monitor review its policies for a period of two years.
The SEC stressed that, while no fraud occurred in this instance, it is
lapses like this that could facilitate misconduct.