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Robinhood Fined Nearly $30 Million for AML and Supervisory Violations

Robinhood will pay close to $30 million in penalties after the Financial Industry Regulatory Authority (FINRA) found violations related to its anti-money laundering (AML) program, as well as supervisory and disclosure failures.


Robinhood Fined Nearly $30 Million for AML and Supervisory Violations

According to FINRA, Robinhood Financial and Robinhood Securities—two subsidiaries of Robinhood Markets—had AML programs that failed to “detect, investigate, or report suspicious activity, including manipulative trading, suspicious money movements, and instances where customers’ accounts were taken over by third-party hackers.” The self-regulatory organization, which oversees broker-dealers, disclosed the findings in a press release on Friday.


FINRA also alleged that Robinhood Financial did not establish an adequate customer identification program, stating that this shortcoming “resulted in the firm opening thousands of accounts when it had not reasonably verified the customer’s identity.”


In addition to the AML violations, Robinhood Markets and Robinhood Financial have agreed to pay restitution of $26 million and $3.75 million, respectively, to customers who received incomplete or inaccurate disclosures regarding the cancellation and re-entry of their securities orders at lower prices.


The alleged misconduct related to AML and customer identification programs took place over an 11-month period in 2021, while certain supervisory issues—such as failures in monitoring social media influencers’ communications—continued as recently as March 2023.


Commenting on the settlement, Erica Crosland, associate general counsel and head of regulatory enforcement and investigations at Robinhood Markets, stated in an emailed response: “We are pleased to resolve these historical matters, many of which date as far back as 2014, and which Robinhood Securities and Robinhood Financial have since remediated.”


A Robinhood spokesperson further noted that in 2021, the company made significant improvements to its AML and customer identification compliance programs by “substantially enhancing” its technology, refining compliance procedures, and strengthening its approach to suspicious activity monitoring and customer identity verification.


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This latest penalty follows a previous $45 million settlement that Robinhood Financial and Robinhood Securities paid to the Securities and Exchange Commission (SEC) in January for failing to investigate suspicious activity on their platforms. According to regulators, Robinhood did not file suspicious activity reports in a timely manner between 2020 and 2022.


Rory Doyle, head of financial crime policy at compliance vendor Fenergo, emphasized that FINRA’s enforcement action underscores the agency’s commitment to enforcing strong AML compliance. Doyle also highlighted the importance of financial institutions proactively enhancing their AML frameworks: “to enhance AML frameworks by integrating data sources (ensuring a non-siloed approach), ensuring policies align with regulations and are followed through, and training staff to detect risks, staying ahead of evolving compliance expectations.”


In a separate development, Robinhood announced in February that the SEC had dropped its investigation into potential violations of the Securities and Exchange Act by Robinhood Crypto. The company had first disclosed the investigation to investors in May 2024.


The latest fine represents another instance in a pattern of regulatory penalties for Robinhood. Previous enforcement actions against the company include a record $70 million penalty from FINRA in 2021, a $65 million fine from the SEC in 2020, a $30 million settlement with the New York State Department of Financial Services in 2022, and a $7.5 million fine from the state of Massachusetts in 2024. Additionally, Robinhood disclosed in 2023 that an ongoing investigation by the New York Attorney General’s office remains unresolved.

By fLEXI tEAM



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