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August 10, 2020 at 01:42 PM
(Image: Shutterstock)
Interactive Brokers agreed to pay a total of $38 million in penalties to settle charges that it violated anti-money laundering laws and regulations, while repeatedly failing to file Suspicious Activity Reports for U.S. microcap securities trades it executed on behalf of clients.
The firm, for instance, will pay an $11.5 million penalty to settle the SAR claims, according to the Security and Exchange Commission’s order, which was released Monday. Broker-dealers are required to file SARs for transactions they suspect to involve fraud or a lack of an apparent lawful business purpose.
From at least July 1, 2016, to June 30, 2017, the firm failed to file more than 150 SARs relating to suspicious activity involving certain U.S. microcap securities transactions it executed on behalf of its customers, the SEC alleged.
“During the relevant period, IB ignored or failed to recognize numerous red flags, failed to properly investigate certain conduct as required by its written supervisory procedures, and ultimately failed to file SARs on suspicious activity,” it added.
Other Actions
The Financial Industry Regulatory Authority, meanwhile, fined Interactive Brokers $15 million for widespread failures in the firm’s anti-money laundering (or AML) program, which the regulator claimed had gone on for more than five years.
As part of the settlement, FINRA also required Interactive Brokers to certify that it would implement the recommendations of a third-party consultant to remedy the firm’s AML program failures.
Without admitting or denying the findings, the firm submitted a letter of acceptance, waiver and consent to FINRA on July 28 in which it agreed to the regulator’s sanctions. FINRA accepted the letter Monday.
