The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that Interactive Brokers will pay $11.8 million in a settlement over possible violations of several U.S. sanctions programs. These violations involved providing services to restricted regions and individuals, as well as handling trades connected to U.S.-sanctioned entities.
Interactive Brokers Accused of Violating U.S. Sanctions
According to OFAC, the brokerage firm allowed clients in Iran, Cuba, Syria, and Crimea to access its platform and conduct financial transactions. These regions are subject to strict U.S. sanctions, which prohibit American companies from offering services to people or entities based there.
In addition to serving sanctioned regions, Interactive Brokers also processed trades involving companies under the Chinese Military-Industrial Complex Sanctions. These sanctions were put in place to prevent U.S. investors from financially supporting certain Chinese companies linked to defense or surveillance operations.
U.S. sanctions are legal restrictions that serve national security and foreign policy goals. They are created to prevent money, technology, or services from being used by governments, groups, or individuals seen as a threat to global peace or U.S. interests. Businesses in the United States, especially those in the financial sector, are required to follow these rules carefully.
OFAC Found Multiple Compliance Failures
OFAC, which enforces U.S. sanctions laws, found that Interactive Brokers processed transactions involving blocked individuals and companies across different sanctions programs. These included accounts and trades linked to restrictions on Russia, Venezuela, Syria, and the Global Magnitsky program, which targets human rights violations.
The agency also said that the firm carried out Russia-related investment transactions after they had been prohibited. Additionally, Interactive Brokers allowed dealings with people who had been formally blocked under sanctions targeting weapons, corruption, and national security threats.
Much of the problem stemmed from the company’s compliance systems, which are supposed to detect and prevent illegal activity. These systems failed to screen clients and trades properly. Some filters were outdated, while other red flags were missed or ignored.
Every financial firm is expected to have strong internal controls in place to identify restricted parties and prohibited actions. These include automatic checks of clients and transactions against OFAC’s sanctions lists. If these controls are weak, outdated, or not followed, companies can easily end up violating federal law—even if they didn’t intend to.
OFAC said that these breakdowns in compliance allowed unauthorized activity to continue for years. The agency emphasized that these types of mistakes are preventable when companies maintain and regularly test their systems.
$11.8 Million Penalty Highlights Compliance Expectations
Interactive Brokers agreed to pay $11,832,136 to settle its potential civil liability. OFAC noted that the violations were not considered “egregious,” meaning they were serious but not the most severe. However, the settlement still reflects the high importance the government places on sanctions enforcement.
The firm cooperated with OFAC during the investigation and voluntarily disclosed several of the issues. These steps helped reduce the overall penalty and showed that the company took the matter seriously once the problems were discovered.
This case is a strong reminder of the consequences of compliance failures, especially in international financial services. Even well-established companies can face significant fines if they don’t monitor systems closely or respond quickly to red flags.
The OFAC settlement highlights how critical it is for firms to stay updated with sanctions changes, invest in strong screening tools, and train staff to respond properly. Failing to do so can result in financial damage and legal trouble.