Interactive Brokers Blocks Suspicious Accounts

Interactive Brokers forcibly close suspicious accounts of certain clients. Information about this appears in all specialized forums and blogs.

Why have the rules been tightened? 

One of the reasons is that Interactive Brokers LLC was fined $38 million for not identifying suspicious activity and failing to comply with anti-money laundering requirements. 
The rumor of the country’s downgrade runs, which increases the requirements for KYC and the conditions for deposits and withdrawals of funds. That is, residents of countries included in the list of “unreliable” ones can replenish and withdraw their funds only from the countries of which they are residents.

Why can an account be blocked?

There are the following possible causes:

  • The client’s residence and the country from which the replenishment/withdrawal of funds is made do not coincide;
  • Replenishment/withdrawal of funds is carried out to different accounts and banks;
  • Frequent replenishment/withdrawal of small amounts;
  • A large number of friend and family accounts;
  • Trading is not carried out from the specified country of residence or using a VPN;
  • A small trading account;
  • Very low trading activity.

Answers to the most frequently asked questions

Which “high-risk country accounts” are at risk of being closed?

  • Personal accounts with a balance of < $10k and low trading activity
  • Corporate accounts with a balance of < $5M
  • FFA advisors’ accounts with assets under management of <$25M

Will changing the address (residence permit) and tax residence help in this situation?

No, they will not. Only a passport (citizenship) of one of the low-risk countries will help. 

Will IB open accounts for new clients from “high-risk countries”?

Yes, it will do it to individual clients. Corporate accounts and advisers’ accounts will be opened with difficulty and many questions, with an eye to the assets specified in paragraph (1). 

Can an owner of a closed account open a new account?

Most likely, he/she can’t. The system will track the match and reject such an application. Currently, this process is becoming more automated.

Can a person prevent such closure by changing his/her behavior?

Everyone who received the message cannot influence the decision, as it is final. 

What should people do with their assets?

Such people should sell their assets and withdraw their funds to the bank. 
Transfer assets to another broker. There are the following options: Saxo Bank and eToro

About the author

InvestorGreg Editorial Team

InvestorGreg Editorial Team

The InvestorGreg Editorial Team is a group of financial writers and analysts who cover the worlds of finance and investment. Read more

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