On July 15, 2025, the Department of the Treasury’s Office of Foreign Assets Control announced that it reached a $11.8 million settlement with Interactive Brokers LLC (“IB”), a global electronic broker-dealer, to resolve allegations that it provided brokerage and investment services in violation of multiple OFAC sanctions programs. OFAC reported that IB agreed to settle its potential civil liability for apparent violations of U.S. sanctions related to the provision of brokerage and investment services to persons in sanctioned jurisdictions, including Iran, Cuba, Syria, and the Crimea region of Ukraine, between 2016 and 2024. The company also allegedly processed trades in securities that were subject to the Chinese Military-Industrial Complex program; engaged in new investment in Russia; and conducted transactions involving persons blocked pursuant to OFAC’s sanctions on Russia, Venezuela, Syria, and Global Magnitsky programs.
According to OFAC, IB’s settlement amount was based OFAC’s determination that the apparent violations were voluntarily self-disclosed and were non-egregious in nature. In determining the settlement amount, OFAC also considered IB’s substantial cooperation during OFAC’s multi-year investigation and the substantial remedial measures IB implemented when the apparent violations were discovered. OFAC indicated that IB invested more than $10 million in remedial measures to address program deficiencies related to the apparent violations.
OFAC reported that IB discovered a total of 12,367 apparent violations that had allegedly occurred between July 15, 2016 and January 31, 2024, while conducting an internal sanctions compliance review in 2018. Nearly 12,000 of the apparent violations related to investment services provided, between July 2016 and July 2021, through its online brokerage platform to foreign customers, including more than 200 accountholders located in Iran, Cuba, Syria, and Crimea. While a majority of these customers indicated that they lived in non-sanctioned jurisdictions, IB was able to confirm that the customers were located in sanctioned jurisdictions using Internet Protocol (“IP”) address data and other investigative efforts. IB also discovered that, between 2016 and 2021, deficiencies existed in its IP address blocking and sanctions screening procedures that contributed to these apparent violations. According to OFAC, the company indicated that these systems were not adequately audited or tested during this time frame.
IB’s internal review also allegedly uncovered 259 fund transfers to accounts at blocked Russian banks that were sanctioned pursuant to Executive Order 14024. OFAC reported that the transfers were processed, between February and October 2022, on the mistaken belief that the transfers were authorized by general licenses as wind-down transactions.
Between August 2020 and November 2021, IB also found that it allegedly processed 18 transactions, worth approximately $28,000, for customers trading in securities issued by Xinjiang Tianye Water Saving Irrigation System Co Ltd., a company owned 50 percent or more by an OFAC-sanctioned paramilitary organization. IB stated that these transactions were processed “due to a delay in obtaining ownership information relevant to the application of OFAC’s 50 percent rule to Xinjian Water.”
In June 2019, IB also allegedly processed two fund transfers totaling approximately $339,000 for an individual designated under the Syrian Sanctions regime. While the screening program flagged the customer as a potential sanctions match, the transactions were processed “because of its delay in reviewing alerts due to a lack of resources.” According to OFAC, IB also had no clear procedure on how to prioritize and escalate sanctions queries.
Between September 2018 and June 2019, IB also reportedly processed 13 transactions, worth approximately $135,000, on behalf an individual who was sanctioned pursuant to the Venezuelan sanctions regime. While the sanctions screening system alerted IB staff that the customer was a designated person, the staff member incorrectly interpreted the alert as a false positive and processed a total of 10 foreign exchange transactions for the customer.
The remaining apparent violations involved customers whose securities trades were linked to margin loan accounts, which allow investors to borrow capital or initiate securities trades based on the value of the assets and cash available in their accounts. IB indicated that it would typically liquidate assets in the margin accounts if it was necessary to maintain compliance with certain margin requirements – liquidations that generally occurred automatically. However, according to OFAC, the system that IB used to automatically process these liquidation orders was not configured to check sanctions-related restrictions. As a result, IB allegedly processed a total of 29 sale transactions on behalf of U.S. persons in issuers subject to prohibitions under the Chinese Military-Industrial Complex sanctions, between July 2022 and January 2024. In addition, between April and December of 2023, a total of 66 margin loans were reportedly granted to persons located in Russia, due to a limited technical deficiency that allowed certain margin accounts to restore margin permissions for a period of four days in 2023.
According to OFAC, IB is potentially liable for apparent violations of the Iranian Transactions and Sanctions Regulation (ITSR), 31 CFR part 560; the Cuban Assets Control Regulations (CACR), 31 CFR part 515; the Syrian Sanctions Regulation (SySR), 31 CFR part 542; EO 14071, EO 14024, and the Russian Harmful Foreign Activities Sanctions Regulation (RuHSR), 31 CFR part 587; the Chinese Military-Industrial Complex Sanctions Regulation (CMICSR), 31 CFR part 586; the Global Magnitsky Sanctions Regulations (GMSR), 31 CFR, part 583; and the Venezuela Sanctions Regulations (VSR), 31 CFR part 591.
OFAC emphasized that this enforcement action highlights how important it is for U.S. companies to proactively conduct self-initiated, internal sanctions reviews to check for potential compliance deficiencies. OFAC also urged companies to ensure the modernization of their sanctions compliance program and any real-time, automated systems used to manage large volumes of transaction activity. According to OFAC, broker-dealers should use systems that are well-designed to address the particular sanctions risks faced by these business and conduct timely audits and testing of these systems to ensure that they are working as expected. OFAC also suggested that companies use all available information, including IP addresses and geolocation data, to verify a customer’s location or ordinary residence for sanctions compliance purposes.