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E*Trade’s unknown Dubai customers

May 9, 2011

The online stock trading company E*Trade owes Dubai at least $200,000 and up to $300,000 in fines for its failures to comply with anti-money laundering requirements including know-your-customer provisions.

What’s disturbing about the news is the faint suggestion that nefarious characters could be investing and trading with E*Trade’s Dubai unit.  E*Trade is closing 1,200 customer accounts in the wake of this news.  That means E*Trade may have had 1,200 customers for whom they could not document the source of their wealth or for whom they lacked current customer information.

Hat tip to Bachir El-Nakib from Compliance Alert for the following:

E*TRADE acknowledges these deficiencies which include failing to:

  • Obtain sufficient documentary evidence of its clients’ origin of funds and/or sources of wealth;
  • Obtain, for some of its clients, sufficient documentary evidence of address or appropriately certified copy documents;
  • Have adequate polices in place to ensure that documentation concerning a client’s identity remains accurate and up-to-date, resulting in E*TRADE’s failure to request and obtain updated Know Your Customer documents;
  • Have policies, procedures, systems and controls to adequately address the need to assess the money laundering risk of its clients; and
  • Ensure that its compliance resources were sufficient given the nature and scale of its business activities.

Now if Dubai could just apply the same standards to real estate corporations, zakat charities, and hawaladars in the U.A.E., we’d be on the right track.

2 comments

  1. again proving that Islamic banking system is nothing more then Hawala 2.0 ….



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