The Cayman Islands Monetary Authority has imposed administrative fines totalling $250,000 on broker Seven Mile Securities for anti-money laundering violations.
In an enforcement notice, the regulator said an onsite inspection had uncovered the company’s failure to comply with the anti-money laundering regulations.
Specifically, the securities firm had shortcomings with its application of due diligence and enhanced due diligence measures.
In addition, Seven Mile Securities had failed to monitor the implementation of a risk-based approach; failed to understand the nature, and purpose of business relationships; and failed to conduct and document all appropriate sanctions checks.
In September 2020, the offshore brokerage was named in connection with the indictment of former Cayman Islands resident Andrew McAlpine for stock fraud.
McAlpine, a Canadian, is accused of having participated in a penny stock pump-and-dump scheme.
According to the indictment, a co-conspirator who turned confidential informant and cooperated with the FBI, in October 2018 transferred 700,000 shares of Argus Worldwide Corp to McAlpine, who deposited the shares in his offshore brokerage account in the name of Dunstaffnage Corporation with Seven Mile Securities in the Cayman Islands.
In the following months McAlpine and another defendant then allegedly engaged in manipulative trading in the Argus shares to create the misleading appearance of active trading in the stock.
McAlpine has pleaded guilty to one count of conspiracy to commit securities fraud and is awaiting sentencing. Prosecutors are calling for a prison sentence of between six and 12 months.
The Federal District Court for Southern California in San Diego has scheduled sentencing for 10 Jan., 2022.
OffshoreAlert reported that its search of the Cayman Islands General Registry showed that Seven Mile Securities was incorporated in Cayman on 9 June, 2011, and its directors are Daniel Falkenberg and Sabrina Sheridan.
Seven Mile Securities’ website is down. It previously showed a picture of Camana Bay with its registered office address at a service provider in George Town. A Canadian phone number and email were the only contact details.
The Cayman Compass has contacted Seven Mile Securities for comment by email but not received a response at the time of publication.
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