Interactive Brokers LLC OFAC Settlement: $11.8M (2025)

IB's 12,367 apparent violations span seven distinct categories across an eight-year period.

From July 2016 to July 2021, more than 200 accountholders located in Iran, Cuba, Syria, and Crimea engaged in nearly 12,000 transactions through IB's online brokerage platform. Most had provided Know Your Customer information indicating residence elsewhere; IB identified their actual locations through IP address data. Deficiencies in IB's IP geo-blocking controls, including a technical bug, allowed access via IB's desktop and mobile applications. IB also failed to include Crimea in its IP Blocking List prior to May 2019, failed to include Sevastopol IP addresses from May 2019 to June 2021, and relied on representations from third-party introducing brokers that they would not introduce new clients from Crimea. These constituted apparent violations of § 560.204 of the ITSR, § 515.201 of the CACR, § 542.207 of the SySR, and § 1(a)(iii) of E.O. 13685.

From February 25 to October 10, 2022, IB processed 259 customer funds transfers to accounts at Russian banks designated under E.O. 14024, acting under the mistaken belief that relevant wind-down general licenses authorized the transfers, constituting apparent violations of §§ 1 and 4(a) of E.O. 14024 and § 587.201 of the RuHSR.

IB's Consumer Communication Protocol (CCP) system, which processes margin-related automatic liquidation orders, did not incorporate sanctions-related securities screening. From July 4, 2022 to January 31, 2024, this gap caused IB to process 29 sale transactions on behalf of U.S. persons in 13 issuers subject to E.O. 13959, as amended by E.O. 14032, including entities involved in development of weapons and Chinese surveillance technology under China's Military-Civil Fusion strategy, constituting apparent violations of § 586.201 of the CMICSR.

Following the April 2022 prohibition on new investment in Russia, IB restricted new margin positions for Russia-based customers. A technical deficiency allowed two accounts to reactivate margin permissions between March 30 and April 3, 2023. Those accounts initiated 66 margin loans between April 1 and December 30, 2023, on which IB earned interest, constituting apparent violations of § 1(a)(i) of E.O. 14071.

From August 5, 2020 to November 30, 2021, IB processed 18 transactions worth approximately $28,000 in securities issued by Xinjiang Tianye Water Saving Irrigation System Co Ltd. (Xinjiang Water), which is owned 50 percent or more by Xinjiang Production and Construction Corps (XPCC), designated on July 31, 2020 for serious human rights abuses against ethnic minorities in Xinjiang. IB processed the transactions due to a delay in obtaining ownership information relevant to applying OFAC's 50 percent rule, constituting apparent violations of § 583.201 of the GMSR.

From September 25, 2018 to June 26, 2019, IB processed 13 transactions worth approximately $135,826 on behalf of an individual designated under E.O. 13692 for involvement in a front network enabling corruption in the Venezuelan Government, comprising three withdrawal attempts totaling $16,466 and 10 foreign exchange transactions totaling $119,360. IB's screening systems flagged the individual as a potential SDN List match on September 28, 2018, but staff incorrectly dispositioned the alert as a false positive. IB did not restrict funds transfer and trading capabilities until October 10 and October 29, 2018, respectively, constituting apparent violations of § 591.201 of the VSR.

On June 18 and June 25, 2019, IB processed two funds transfers totaling approximately $339,000 for an individual designated under E.O. 13573 and E.O. 13582 for involvement in an international network benefiting the Assad regime. IB's screening function flagged the individual as a potential SDN List match on or around June 12, 2019, but IB failed to block the account for more than a month due to a lack of resources to review alerts and the absence of a clear procedure for prioritizing and escalating sanctions queries. These constituted apparent violations of § 542.201 of the SySR.

The statutory maximum civil monetary penalty applicable in this matter is $5,234,583,687. OFAC determined that IB voluntarily self-disclosed the apparent violations and that the apparent violations constitute a non-egregious case. Accordingly, under OFAC's Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A., the base civil monetary penalty equals the sum of one-half of the transaction value for each apparent violation, which is $60,130,059. The settlement amount of $11,832,136 reflects OFAC's consideration of the General Factors under the Enforcement Guidelines, the significant remedial measures IB implemented upon discovery of the apparent violations, and the substantial cooperation IB provided over the course of an extensive, multi-year OFAC investigation.

Broker-dealers utilizing real-time, automated systems to manage large volumes of transactional activity should consider appropriate investments to ensure the modernization of their sanctions compliance programs alongside the innovation and development of their customer-facing platform technologies that interact with the U.S. financial system. Controls should be well designed to address the particular sanctions risk presented by the business and its technologies, which may include appropriate, risk-based calibration of sanctions screening protocols and geo-blocking controls. OFAC strongly encourages the implementation of sanctions compliance tools and programs that are commensurate with the size, speed, and complexity of a business' operations. In implementation of such tools, businesses should ensure the integrity of the data and software utilized for sanctions compliance, and conduct timely audits, testing, and remediation of compliance-related systems and technologies. After remediation, businesses should validate remedial measures to ensure such measures' designed impact, especially in the case of a technological or systems-focused remedial measure.

This enforcement action underscores the importance of obtaining and using all available information to verify a customer's location or ordinary residency, including by using IP address and geolocation data for sanctions compliance purposes. Firms providing global services through online platforms should integrate such information into their risk-based sanctions compliance program to prevent the provision of services to persons located in comprehensively sanctioned jurisdictions.

This enforcement action also demonstrates the importance of accurately assessing the sanctions risk presented by particular service offerings, business lines, and systems and technologies in their ordinary operation, including the scope and application of relevant prohibitions and license authorities. Such an assessment is particularly important for online businesses offering myriad, differentiated products and services and operating systems that function in real time and on a global scale.

This enforcement action also underscores the need for appropriate investment in sanctions compliance headcount. Conducting proactive, self-initiated sanctions reviews to identify compliance deficiencies and potential apparent violations enables firms to identify issues and promptly self-disclose to OFAC while taking steps to remediate deficiencies.

This page summarizes an OFAC enforcement case based on the document archived below. SanctionsLookup assumes no liability for errors, omissions, or inaccuracies in the original documents, this summary, or any changes made to the source documents at any time.

Provided for informational purposes only and does not constitute legal or compliance advice. Always consult the source document directly rather than relying on this summary.