12 August 2020 | AtoZ Markets – Interactive Brokers is an FX and CFD broker. Founded in 1978, it has more than 24 offices in various countries and serves more than 700,000 brokerage accounts. Interactive Brokers serves traders in the United States and abroad. The broker is licensed by many major regulators.
Interactive Brokers Will Pay Total $38 Million Fine to CFTC, SEC and FINRA
Interactive Brokers has agreed to pay a total of $38 million to settle charges with three US regulators. Under the terms of the agreement, the broker will pay $11.5 million fine to SEC, $15 million fine to FINRA and $11.5 million fine to CFTC. The broker agreed to pay the fine without admitting or denying the regulatory findings.
CFTC's Findings Against Interactive Brokers
According to the CFTC, Interactive Brokers lacked risk assessment process for money laundering. Moreover, from June 2014 to November 2018, the broker failed to ensure that its employees had policies and procedures for supervising customer accounts. The broker also failed to investigate suspicious account activity and conduct SAR determinations.
CFTC Director of Enforcement James McDonald said, “Our regulatory regime requires certain intermediaries to monitor and report suspicious activity. These suspicious activity reports or SARs that we also use to identify fraud, manipulation, and other wrongdoing in our markets—often at the earliest stages”.
SEC's Findings Against Interactive Brokers
According to the SEC, Interactive Brokers submitted more than 150 SARs a year and failed to flag potential manipulation. The regulator also determines that the broker was unaware of the suspicious activity. It failed to investigate suspicious activity properly and failed to file a SAR on time.
Marc P. Berger, Director of the SEC’s New York Regional Office, said, "SAR filings are an essential tool in assisting regulators and law enforcement to detect potential violations of the securities laws. Today’s multi-agency settlement also reflects the seriousness we place on broker-dealers complying with their SAR reporting obligations and maintaining appropriate anti-money laundering controls."
FINRA’s Findings Against Interactive Brokers
FINRA urged Interactive Brokers to implements the recommendations of a third-party consultant to remedy its AML program failures. However, FINRA determined that between January 2013 and September 2018, the broker was unable to provide the necessary resources to meet its AML obligations. “Today’s action is a reminder that member firms must tailor their AML programs. They also must dedicate resources to programs commensurate with their growth and business lines. FINRA will continue to ensure that firms comply with their obligation,” said Jessica Hopper, FINRA Executive Vice President.
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