As several news sources have recently reported (here’s one) E-Trade Financial Corporation has agreed to pay $1 million in a settlement with the Securities and Exchange Commission which accused the firm of failing to comply with anti-money laundering regulations. As part of the agreement, E-Trade must also bring on third-party consultants to oversee its AML program.

This ruling — the first of its kind to include a fine, according to the regulator — points out the continued emphasis that the U.S. government is placing on the seriousness of money laundering. In this case the issue was identified as a poor customer identification program (CIP). One would think that an industry-leading technology-based company such as E-Trade would have nothing but the best technology at its disposal with which to administer its CIP procedures. But, as this case highlights, companies should not think simply installing a “whiz bang” technology is going to solve their problems. Regulators are on the lookout for process deficiencies. All companies should be asking themselves: do I have a systematic, verifiable process for identifying suspicious customers? While it is true that technology can assist in this regard, it cannot take the place of sound process.