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Interactive Brokers settle charges it failed to flag suspicious activity and AML...


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Interactive Brokers settle charges it failed to flag suspicious activity and AML...

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  #1 (permalink)
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WASHINGTON/NEW YORK (Reuters) - Interactive Brokers LLC will pay $38 million in penalties to settle charges it failed to flag suspicious activity and meet anti-money laundering requirements, U.S. markets regulators said on Monday.

The broker-dealer agreed to pay $15 million to the Financial Industry Regulatory Authority (FINRA) for widespread anti-money laundering failures that persisted for over five years, FINRA said. Interactive Brokers saw "dramatic growth" in its business from January 2013 to September 2018, becoming one of the largest electronic broker-dealers in the United States, but failed to dedicate necessary resources to properly surveil hundreds of millions of dollars in wire transfers or to reasonably investigate suspicious activity, according to FINRA.


As part of the deal, the firm will have to implement recommendations from a third-party consultant to remedy the issues.

Interactive Brokers will also pay $11.5 million to resolve parallel charges with the U.S. Securities and Exchange Commission (SEC) over repeated failures to file suspicious-activity reports for U.S. microcap securities trades executed for customers, the agency said in a statement. The firm did not admit or deny the SEC's findings, it said.

Interactive Brokers will pay another $11.5 million fine to the Commodity Futures Trading Commission for failing as a registered futures commission merchant to diligently supervise employees' handling of accounts. The firm executed orders for a Harvard graduate who was previously charged with fraud in a Ponzi-like scheme, CFTC said.

The firm will pay another $706,214 in disgorgement for the CFTC charges.

"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," a spokesperson for Interactive Brokers said in an emailed statement.

(Reporting by Jonathan Stempel in New York and Chris Prentice in Washington; Editing by Steve Orlofsky)

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  #2 (permalink)
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I was once given a hard time by Interactive Brokers for trying to pay a couple of hundred dollars into my account from the bank account of a limited company which had been dormant from the day I'd registered it. I wanted to close the company's bank account and put the insignificant amount into my brokerage account. I was put through the ringer despite my being able to show that nobody else had any interest in the company, or its bank account.

If nickel-and-dime transactions can be flagged to the IB fraud team, and such merit a response from them, then it begs the question as to whether they genuinely have ineffective internal controls - or just that they are happy to turn a blind eye when it suits them; and when the business is attractive enough to them. The same can be asked about institutions like HSBC and Deutsche Bank.

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sorry for my bad english, but what does that mean for existing IB customers or for those being interested in opening an IB account?

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patricia View Post
sorry for my bad english, but what does that mean for existing IB customers or for those being interested in opening an IB account?

IB is still rated No.1 broker by Barren.
For no customer these money laundering penalties will have an effect except for new rules eventually.

To see the potential of the company here an excerpt of their actual homepage:
"Interactive Brokers Group (IBG LLC) equity capital exceeds $8.2 billion, over $6.0 billion in excess of regulatory requirements.1 18.5% of IBG LLC is owned by the publicly traded company, Interactive Brokers Group, Inc. and the remaining 81.5% is owned by our employees and affiliates."

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