SEC Charges North Carolina BD With Anti-Money Laundering Violations

The SEC found that Pinnacle established, documented, and maintained a customer identification program (CIP) that specified it would identify and verify the identities of all of its customers. However, during a six-year period, Pinnacle failed to follow the identification and verification procedures set forth in its CIP.

Pinnacle and Paciorek agreed to settle the SEC’s enforcement action without admitting or denying the allegations, and Pinnacle agreed to pay $25,000 in financial penalties. The SEC says that as part of an action taken by the Financial Industry Regulatory Authority (FINRA) in February 2010, “Pinnacle also has agreed to certain undertakings, including extensive AML training for its employees, as well as the hiring of an independent consultant to review its AML compliance program.”

Robert Khuzami, Director of the SEC’s Division of Enforcement, said in a statement that “left unchecked, Pinnacle’s business model yields significant money laundering risks. If a broker-dealer provides customers with direct access to the U.S. securities markets, it must comply with the applicable customer identification rules.”