TREASURY DEPARTMENT SETTLES ENFORCEMENT ACTION WITH ONLINE BROKERAGE FIRM
August 28, 2025
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On July 15, 2025, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) settled with Interactive Brokers LLC (“IB”), a global electronic broker-dealer that provides brokerage and investment services to customers in Iran, Cuba, Syria, and the Crimea region of Ukraine. IB agreed to pay $11,832,136 to OFAC in a voluntary settlement, which follows a self-initiated compliance review beginning in 2018. OFAC reported nine violations over a period of eight years, one of which included transactions occurring when customers were in the above-mentioned sanctioned jurisdictions during the transactions. IB also authorized bank transfers to blocked Russian Federation banks and enabled trading in the securities of thirteen entities involved in military, intelligence, and security research and development programs under the People’s Republic of China’s Military-Civil Fusion strategy. The maximum applicable civil penalty for the violations is $5,234,583,687, but because IB self-disclosed the violations, OFAC deemed those violations as non-egregious. Accordingly, the base civil monetary penalty equals one-half of the transaction value for each violation. The settlement amount of $11,832,136 is significant (nearly 1/6 of the maximum penalty), and reflects OFAC’s consideration of aggravating and mitigating factors, harm to customers and IB’s internal audit, self-reporting, and development of a compliance program to prevent reoccurrence. Companies should familiarize themselves with A Framework for OFAC Compliance Commitments to understand sanctions evaluations. OFAC recommends both U.S. and foreign entities maintain an updated sanctions compliance program (“SCP”) predicated on the five essential components of compliance: management commitment, risk assessment, internal controls, testing and auditing, and training. An updated and effective SCP can be an important mitigating factor when considering the severity of violations.
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