E-Trade Financial Corp., the fourth-largest online brokerage by client assets, will pay $1 million to settle claims that it violated the USA Patriot Act's money-laundering clauses by failing to check the identities of more than 65,000 customers.

The Securities and Exchange Commission said Wednesday that E-Trade failed to verify the names of people who shared accounts from October 2003 until June 2005.

The settlement is the largest with the SEC in a laundering case since Congress passed the USA Patriot Act. The 2001 law requires financial firms to confirm the identities of account holders and alert regulators to suspicious transactions.

"A compliance lapse of this type has the potential to undermine the nation's anti-terrorism and anti-money-laundering efforts," Linda Thomsen, the SEC's enforcement chief, said in a press release.

E-Trade did not admit or deny wrongdoing. Pam Erickson, a spokeswoman for the New York company, did not immediately return a call seeking comment.

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