Greenwich, Conn.-based Interactive Brokers is being forced to pay $38 million in fines to FINRA, the SEC and the Commodity Futures Trading Commission for failing to investigate and report suspicious activity on its platform.
For five years, starting in January 2013, Interactive Brokers grew so much so that it cleared more transactions for foreign financial institutions than any other broker-dealer. During that period, FINRA found a lack of preventative measures in the brokerages' anti-money laundering program.
“Today’s action is a reminder that member firms must tailor their AML programs to the firms’ business model and customer base, and also dedicate resources to programs commensurate with their growth and business lines," said Jessica Hopper, FINRA executive vice president and head of enforcement. "FINRA will continue to take steps to ensure that firms comply with their obligation to monitor for, detect and report suspicious activity,”
According to FINRA, Interactive Brokers failed to monitor wire transfers for hundreds of millions of dollars. A portion of that were deposits from entities based in countries that are considered by the U.S. and international anti-money laundering agencies to be high risk.
The firm’s compliance manager warned the firm that the program was understaffed, causing limited investigations of suspicious activity. FINRA stated the firm took years to provide sufficient personnel.
FINRA is also accusing the firm of not implementing policies and procedures that would establish a system to report suspicious transactions, which is required by the Bank Secrecy Act. AML staff had identified suspicious activity such as manipulative trading, Ponzi schemes and other criminal activity but did not submit a suspicious activity report until FINRA prompted them to do so.
Interactive Brokers neither admitted nor denied the charges. It has, however, consented to the findings.
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