The US Treasury Department’s Office of Foreign Assets Control (OFAC) has announced an $11.8 million settlement with Interactive Brokers LLC (IBKR), one of the world’s largest electronic trading platforms. The penalty stems from multiple apparent violations of US sanctions laws, which saw the firm processing financial transactions and offering services to individuals and entities in sanctioned regions and sectors over a multi-year period.

The enforcement action is yet another signal from Washington that sanctions compliance remains a core component of the US national security and foreign policy strategy-and that regulators expect even highly automated financial institutions to implement vigilant, up-to-date compliance systems.

OFAC’s investigation found that Interactive Brokers failed to prevent clients located in jurisdictions subject to strict US sanctions-including Iran, Syria, Cuba, and the Crimean region of Ukraine-from using its trading platform. By allowing access and facilitating financial activity in these jurisdictions, IBKR exposed itself to potential civil liability under multiple sanctions regimes.

These regions are designated by the US government as high-risk due to concerns over terrorism, military aggression, corruption, and human rights abuses. Consequently, American firms are strictly prohibited from offering financial services or conducting any form of commerce with entities or individuals based in those areas without explicit authorization from OFAC.

Interactive Brokers’ systems, however, reportedly permitted the execution of trades, the opening of accounts, and other financial transactions that should have been blocked.

Beyond the geographic violations, OFAC also cited trades that involved companies listed under the Chinese Military-Industrial Complex (CMIC) sanctions program. These entities are linked to the Chinese military, surveillance, and defense industries, and US firms are barred from investing in or facilitating financial activity that would benefit them.

The CMIC-related breaches further underscore the global complexity of sanctions compliance, especially in an era when digital platforms enable cross-border transactions in real time. These sanctions were implemented to prevent US capital from flowing into companies associated with strategic competitors or national security threats, particularly in light of growing tensions between Washington and Beijing over military and technological dominance.

According to the Treasury Department, many of the violations resulted from inadequate internal controls and compliance oversight. The firm’s systems, which are supposed to automatically screen for prohibited individuals, regions, and transactions, failed to function properly. Outdated filters, insufficient rule-sets, and missed red flags allowed unauthorized trading activity to go undetected for years.

In particular, OFAC noted Interactive Brokers’ shortcomings in screening against its list of “Specially Designated Nationals” (SDNs) and other restricted parties. In several instances, the firm permitted trading for clients who were subject to sanctions under Russia-related programs, Venezuela sanctions, Syria sanctions, and the Global Magnitsky Human Rights Accountability Act-a sweeping law that targets human rights abusers and corrupt officials globally.

Moreover, the firm failed to catch clients who were linked to entities or individuals blocked for reasons related to weapons proliferation and national security threats. While the violations were not labeled “egregious”-a legal term used by OFAC to describe the most serious offenses-they were still considered serious enough to warrant a substantial penalty.

Interactive Brokers’ final penalty was set at $11,832,136, a figure that may have been higher had the firm not taken remedial action. OFAC acknowledged that IBKR voluntarily disclosed many of the compliance issues and cooperated fully during the investigation, which began after internal audits and reports revealed problematic activity.

The firm has since undertaken efforts to overhaul its compliance infrastructure, including investing in better screening technologies, retraining staff, and updating procedures to align with OFAC’s evolving sanctions framework. These steps were credited in OFAC’s enforcement notice as contributing factors in determining the final settlement amount.

Nevertheless, OFAC emphasized that the violations occurred over an extended period and were preventable. “This action highlights the importance of implementing robust compliance controls,” the agency said, “especially for financial institutions with global operations and digital platforms that facilitate rapid trading.”

The case serves as a stern warning to financial institutions, fintech firms, and brokerages operating across borders. Sanctions compliance is no longer merely a legal obligation-it is a core business risk. Firms that fail to prioritize compliance or rely too heavily on outdated systems can face significant reputational and financial damage.

As global sanctions programs evolve and proliferate-particularly those targeting Russia, China, and Iran-financial institutions must remain vigilant. OFAC’s enforcement history shows that ignorance of violations or technical glitches in screening systems offer no safe harbor.

The message is clear: compliance cannot be treated as a one-time checkbox or back-office formality. It must be embedded into every level of a firm’s operations, from onboarding and risk assessment to transaction monitoring and customer outreach.

The Interactive Brokers case also signals a broader trend: regulators are increasingly expecting proactive compliance. Voluntary disclosures and cooperation can mitigate penalties, but they do not erase liability.

Moreover, OFAC has made it clear that firms are expected to regularly test and update their compliance tools, stay abreast of new sanctions designations, and train their personnel to respond swiftly to suspicious activity.

Firms with a global client base-particularly those facilitating high-volume, fast-moving digital transactions-face unique challenges in this regard. But with the stakes this high, regulators are unwilling to accept technical excuses for sanctions breaches.

The $11.8 million settlement with Interactive Brokers highlights the high costs of compliance failures in the modern financial landscape. While the firm avoided a more severe penalty due to its cooperation, the case illustrates how even sophisticated firms can fall afoul of sanctions law if they neglect the fundamentals of monitoring, screening, and risk management.

As US sanctions regimes grow in complexity and scope, financial institutions are being called upon to act not just as service providers but as front-line enforcers of international policy. For Interactive Brokers and its peers, the lesson is clear: strong compliance isn’t optional-it’s essential.

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