Washington, D.C. – The Commodity Futures Trading Commission (CFTC) has settled charges against Interactive Brokers LLC for failing to adequately supervise customer accounts and implement anti-money laundering (AML) procedures, marking the first enforcement action concerning a violation of Regulation 42.2, which mandates compliance with the Bank Secrecy Act.
The CFTC order requires Interactive Brokers to pay a $11.5 million civil monetary penalty and disgorge $706,214 earned through its role as the carrying FCM for Haena Park and her companies. Park was previously penalized in a 2018 CFTC action for fraud and misappropriation of investor funds, resulting in a court order to pay over $23 million in penalties and restitution.
According to the CFTC, from June 2014 to November 2018, Interactive Brokers failed to ensure employees adhered to established account supervision policies. The company also lacked a robust process for investigating account activity and determining whether to file Suspicious Activity Reports (SARs). These deficiencies hindered the effectiveness of its AML program.
CFTC Director of Enforcement James McDonald emphasized the importance of SARs as vital tools for identifying fraud and market manipulation. “This case marks the first time the CFTC has charged a violation of Regulation 42.2 and shows our commitment to ensuring these requirements are met,” he stated.
The investigation revealed that while Interactive Brokers had written AML policies, it failed to allocate sufficient resources to effectively monitor, detect, escalate, and report suspicious activity. The company lacked a system to combine information from various reports to identify trends and patterns, limiting analysts’ ability to recognize the full scope of customer activity. This oversight allowed red flags indicating potentially suspicious behavior to go unnoticed.
As part of the settlement, Interactive Brokers is also required to engage a third-party compliance consultant to review and report on the AML and supervisory issues identified in the order.
Source: CFTC.gov
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