On August 10, the U.S. Commodity Futures Trading Commission (CFTC) filed and settled charges against Interactive Brokers LLC, a registered futures commission merchant (FCM). The CFTC charged Interactive Brokers for failing to adequately supervise its employees’ handling of several commodity trading accounts and for failing to adequately implement required anti-money laundering procedures to detect and report suspicious transactions. Interactive Brokers is to pay more than $12 million in penalties and disgorgement.
According to the charges, the alleged violations occurred from June 2014 through November 2018. The CFTC alleges that while Interactive Brokers had appropriate written policies, it failed to ensure that its employees followed these policies and procedures in supervising customer accounts. The CFTC further alleges that Interactive Brokers did not commit adequate resources to ensure that its anti-money laundering procedures were capable of monitoring, detecting, escalating, and reporting suspicious activity in practice. For example, Interactive Brokers allegedly lacked a mechanism to combine information from various reports in order to identify patterns and trends. This case marks the first CFTC enforcement action charging a violation of Regulation 42.2, which requires registrants to comply with the Bank Secrecy Act.
“Our regulatory regime requires certain intermediaries to monitor and report suspicious activity. These suspicious activity reports—or SARs—serve as key tools that we, together with our regulatory partners, use to identify fraud, manipulation, and other wrongdoing in our markets—often at the earliest stages,” said CFTC Director of Enforcement James McDonald. “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.”
On August 12, the CFTC posted a Notice of Covered Action in reference to the case, which notifies individuals who provided information for the case that they should submit a whistleblower award claim. Through the CFTC Whistleblower Program, individuals who voluntarily provide the agency with original information that leads to a successful enforcement action are entitled to a monetary reward. CFTC whistleblower awards range from 10 to 30% of funds recovered by the agency in the case.
The CFTC Press Release on the Case: CFTC Orders Interactive Brokers LLC to Pay More Than $12 Million for Anti-Money Laundering and Supervision Violations
The CFTC Notice of Covered Action: https://www.whistleblower.gov/notices/2020-013