Interactive Brokers, a global brokerage firm based in Greenwich, Conn., has agreed to pay more than $38 million in fines and penalties imposed by three financial regulators for violating federal anti-money laundering regulations, the agencies announced today.
The Securities and Exchange Commission, the Financial Industry Regulatory Authority and the Commodity Futures Trading Commission alleged the firm failed for more than five years to properly oversee its anti-money-laundering operations and ignored red flags of potential money laundering activity.
As is usual in such settlements, Interactive Brokers did not admit or deny the charges. Finra noted that the firm cooperated in the investigations and has taken steps to correct the errors. Founded in 1978, the firm brokers stocks, options, futures, EFPs, futures options, forex, bonds and funds.
"Interactive Brokers has resolved matters with Finra, the Securities and Exchange Commission and the Commodity Futures Trading Commission relating to IInteractive Broker’s past anti-money laundering and Bank Secrecy Act program and practices," the firm said in an email.
"We cooperated fully with our regulators in these inquiries, and the significant steps that we have taken to expand and enhance our program were taken into account in today’s settlements."
"Interactive Brokers continuously works to enhance and strengthen our controls, and makes significant investments to improve our Bank Security Act and anti-money laundering programs. We are committed to ensuring that our programs meet all regulatory expectations and our compliance staff have state of the art systems at their disposal," the firm said.
As part of the settlement, Finra, which fined the firm $15 million, required Interactive Brokers to agree to implement the recommendations of a third-party consultant to remedy the firm’s anti-money-laundering failures.
According to Finra, from January 2013 through September 2018, Interactive Brokers experienced dramatic growth, becoming one of the largest electronic broker-dealers in the United States based on shares traded, clearing transactions for more foreign financial institutions than any other broker-dealer in the nation.
However, Finra also found Interactive Brokers failed to dedicate the resources necessary to meet its anti-money laundering obligations. Interactive Brokers did not reasonably oversee hundreds of millions of dollars of its customers’ wire transfers for money laundering concerns, Finra said. Those wire transfers included millions of dollars of third-party deposits into customers’ accounts from countries recognized as high-risk areas for money laundering.
Finra noted that Interactive Brokers has taken meaningful steps to remediate its anti-money laundering programs.