SEC Enforcement Action: A Wake-Up Call for Investment Advisers 

On January 14, 2025, the U.S. Securities and Exchange Commission (SEC) announced charges against Navy Capital Green Management, a Connecticut-based investment adviser, for misrepresenting its anti-money laundering (AML) procedures and failing to comply with regulatory standards. 

Between October 2018 and January 2022, Navy Capital falsely claimed in offering documents that it conducted AML due diligence on investors. In reality, not only were these procedures not performed, but AML laws did not even apply to the firm in the way it had described. This misrepresentation became especially concerning when one of the firm’s investors—linked to suspected money laundering—led to a foreign court freezing a private fund’s assets.

Key Violations and Penalties 

The SEC found that Navy Capital: 

• Falsely represented AML compliance in investor documents. 

• Failed to implement written policies ensuring disclosure accuracy. 

• Violated the Investment Advisers Act of 1940 and related rules. 

• Without admitting or denying the allegations, Navy Capital agreed to: 

• Cease further violations 

• Accept censure 

• Pay a $150,000 civil penalty 

Why This Matters for Investment Advisers 

This case is a stark reminder that truthful, transparent compliance disclosures are not optional—they are essential. Investment advisers must: 

• Ensure all compliance claims are accurate and verifiable 

• Regularly review and update AML and compliance programs 

• Implement robust internal policies to prevent misrepresentation 

• Failing to do so not only invites regulatory scrutiny but also erodes investor trust and damages firm reputation. 

Best Practices for AML Compliance 

To stay compliant and protect your firm: 

• Audit your compliance statements regularly. 
• Train staff on evolving AML regulations. 
• Document all due diligence procedures. 
• Engage legal counsel for regulatory interpretations. 
• Use compliance software to track and report AML activities. 

Stay up to date with AML compliance and speak to LawVisory to ensure you have the best practice approach to AML policies. 

Download the complete First Quarter 2025 Regulatory Update today to find out more.