FINRA Fines Former Interactive Brokers AML Compliance Officer

The Financial Industry Regulatory Authority (FINRA) has slapped a financial penalty of $25,000 on Arnold J. Feist, a former AML Compliance Officer (AMLCO) of Interactive Brokers, for severe lapses in performing his duties.

Additionally, he has been suspended by the self-regulatory organization for two months from holding principal capacity roles with any FINRA member firms. Further, he needs to be coached on AML responsibilities by taking a complete 10 hours of continuous education.

Incompetent？

Feist was the AMLCO at Interactive Brokers from July 2006 until August 2018. He first registered with FINRA in 1984 and remained registered through Interactive Brokers until April 30, 2020.

He was fully responsible for maintaining the company‘s anti-money laundering (AML) programs that include day-to-day operations. In addition, he needed to review the firm’s monthly surveillance reports and ensure that there were no lapses in analysts works.

But, the agency alleged that Feist failed to establish and implement a reasonably designed AML program at Interactive Brokers. “From January 2013 through August 2018, while he was Interactive Brokers' AMLCO, Feist failed to implement and monitor the firm's AML program,” the FINRA stated.

Moreover, the regulator alleged that Feist failed to properly familiarize himself with Interactive Brokers AML program and did not even supervise AML analysts. Further, he did not even take any steps to understand how the firm was implementing its AML program.

“While he was AMLCO, Feist learned about, but failed to recognize the import of, facts that should have alerted him that Interactive Brokers' AML program was not reasonably designed to detect and cause the reporting of suspicious activity or to comply with Bank Secrecy Act regulations,” the FINRA detailed.

“...it was Feist's responsibility to decide whether Interactive Brokers would file a Suspicious Activity Report (SAR). However, Feist incorrectly believed that the firm did not need to file a SAR concerning suspicious activity the firm first learned about from regulators or law enforcement agencies investigating that same conduct.”

Feist has already accepted FINRAs order and agreed to the fine and suspension.