Former compliance officer resolves AML failures with FINRA

On February 11, 2022, the Financial Industry Regulatory Authority and Arnold J. Feist finalized a letter of acceptance, waiver and consent settling allegations of rule violations in connection with Feist’s work as Anti-Money Laundering Compliance Officer at Interactive Brokers LLC between 2013 and 2018.

According to FINRA, as AML Compliance Officer for Interactive Brokers, Feist failed to establish and implement a reasonably designed anti-money laundering program at the firm, thereby violating several subsections of FINRA Rule 3310, which requires member firms to develop and implement AML compliance programs “reasonably designed to achieve and monitor” compliance with the Bank Secrecy Act and its implementing regulations, and to implement policies and procedures designed to detect transactions that must be reported pursuant to the Bank Secrecy Act. 

Specifically, during his tenure at Interactive Brokers, Feist failed to familiarize himself with the firm’s AML program, and did not supervise the firm’s AML analysists or supervisors; he failed to perform regular monthly reviews of the firm’s surveillance reports, failed to develop an understanding of his employer’s AML risk profile, and did not monitor other AML compliance measures at Interactive Brokers (such as due diligence or enhanced due diligence for foreign financial institutions.  In addition, FINRA found that Feist allowed the firm’s analysts to process as first-party wires millions of dollars of wire deposits from unknown remitters, when in fact the deposits should have been scrutinized as third-party wires.  Furthermore, FINRA identified at least 34 instances between February 2014 and March 2016 in which, under Feist’s management, Interactive Brokers failed to file suspicious activity reports about activity that was under investigation by regulators or law enforcement.

Feist was also determined to have violated 31 CFR 1023.320, which requires broker-dealers to report suspicious activity, and FINRA Rule 2010, which requires firms to observe “high standards of commercial honor” in the conduct of their business.

In consequence, a two-month suspension from association with any FINRA member was imposed on Feist, along with a $25,000 fine, and an undertaking to complete 10 hours of continuing AML education.  On August 10, 2020, FINRA accepted a letter of acceptance, waiver and consent from Interactive Brokers that included findings that the firm had violated FINRA Rules 3310 and 2010 due to deficiencies in the firm's AML program.

Settlement 

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