Charlotte area financial services firm to pay $18M to settle anti-money laundering charges

LPL Financial, a financial services firm with several thousand employees in the Charlotte region, will pay $18 million for anti-money laundering violations, the Securities and Exchange Commission said Friday.

From at least May 2019 through December 2023, the broker-dealer firm failed to meet its own anti-laundering policies by not properly verifying new accounts and did not timely close accounts for customers who did not pass screening measures, an SEC order in the case stated.

LPL also failed to close or restrict thousands of high-risk accounts, such as cannabis-related and foreign accounts, that were prohibited under LPL’s anti-money laundering policies, SEC 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,” SEC enforcement Associate Director Stacy Bogert said in a statement Friday.

LPL did not follow up on some accounts that were flagged as not meeting customer identification requirements and lifted restrictions on other accounts without proper documentation, according to the SEC order.

As of February 2023, about 1,400 accounts with about $350 million in assets were deemed inconsistent with LPL’s cannabis-related businesses policies, the SEC order said.

Despite repeated internal audits and assessments noting the failures, LPL also serviced over 4,000 foreign accounts for customers in 84 countries, of which over 90% were in “closed jurisdictions,” the SEC order states.

LPL’s foreign accounts policy designated only one country, Mexico, as an “open jurisdiction” to solicit new business and service accounts, according to the SEC. All other countries are “closed jurisdictions,” where new business cannot be established.

Several times, LPL’s internal audit flagged restriction-lifting process as problematic, the SEC order said. For example, an item flagged for remediation in May 2019 remained “past due” in February 2022.

Without admitting or denying the SEC’s findings, LPL agreed to a censure and a cease-and-desist order from committing or causing any future similar violations, in addition to the $18 million penalty.

“The settlement relates to record-keeping and retention issues,” LPL spokeswoman Kendra Galante said Friday. “We take our regulatory obligations seriously and are pleased to resolve this matter.”

Other citations against LPL

The SEC order also noted three other times LPL was cited for similar anti-money laundering charges.

In 2021, LPL paid over $4.8 million for its role in furthering an unregistered investment adviser’s “scheme to defraud” clients in Puerto Rico.

In May 2015 and October 2018, LPL was disciplined by the Financial Industry Regulatory Authority for anti-money laundering program failures.

About LPL Financial

LPL Financial is headquartered in San Diego, and has its principal office in Fort Mill.

As of November, LPL had approximately 9,000 employees, according to the company. About 3,000 workers at its Fort Mill corporate center, according to The Herald in Rock Hill.

As of last September, LPL had about 2.2 million customer brokerage accounts holding approximately $307 billion in value, the SEC said.

This story was originally published January 17, 2025 at 2:40 PM.