FINRA fines Webull $4.2 million for anti-money laundering and best execution violations
FINRA censured Webull Financial LLC and fined it $4.2 million. FINRA found the broker approved more than 120,000 accounts without forming a reasonable belief that it knew the true identity of its customers.
On 5 November 2026, FINRA (the Financial Industry Regulatory Authority, the self-regulatory body for US broker-dealers) censured Webull Financial LLC and fined it $4,200,000. The action was resolved through an Acceptance, Waiver and Consent (AWC), a settlement in which a firm consents to FINRA's sanctions and findings without a hearing. Webull Financial consented to the sanctions and to the entry of the findings without admitting or denying them. The firm is also required to comply with undertakings set out in the AWC.
According to FINRA, Webull Financial failed to develop and implement a reasonably designed anti-money laundering (AML) program, including a customer identification program (CIP) and procedures to detect and cause the reporting of suspicious transactions. FINRA found that the firm approved at least 6.5 million accounts using identity verification services from a third-party vendor. By approving accounts where the customer's information could not be reasonably verified by that vendor, the firm approved more than 120,000 accounts without forming a reasonable belief that it knew the true identity of its customers, according to FINRA. FINRA also found that the firm did not have reasonable written procedures describing its processes for verifying customer identities, and lacked reasonable policies and procedures to review applicants' government-issued photo identification.
FINRA found that certain of the firm's surveillance parameters for suspicious transactions were not reasonably designed. It also found that Webull Financial failed to develop and implement an identity theft prevention program (ITPP) reasonably designed to detect, prevent and mitigate identity theft, and that the firm had no relevant procedures that identified red flags of identity theft.
Separately, FINRA found that Webull Financial failed to comply with its best execution and related supervisory obligations. Best execution is a broker's duty to seek the most favourable terms reasonably available for customer orders. According to FINRA, the firm failed to conduct reasonable regular and rigorous reviews of execution quality as required.
Why it matters to AML professionals
Automated onboarding through an identity verification vendor does not move responsibility for knowing the customer away from the firm. AML professionals at app-based brokers and fintechs need clear written procedures for what happens when vendor results are inconsistent, and surveillance rules that are tested and tuned for the firm's actual business.
Red flags in this case
- Identity details returned by a verification vendor that do not match the information the applicant provided
- A submitted photo ID image that is unreadable, altered, or does not show a government-issued document
- Many new accounts sharing the same device, IP address, phone number or bank account
- Several unrelated customers trading the same security in a similar way within a short time
If this landed in your queue
- Check whether the account was approved despite a vendor mismatch or an unresolved identity check, and document how the mismatch was cleared
- Re-verify the customer's identity with independent documents or sources before allowing further activity
- Look for linked accounts through shared identifiers and review their activity together
- Escalate for a suspicious activity report decision if identity theft or coordinated trading is indicated, and record your reasoning
What control failed
Customer due diligence (CDD/KYC). FINRA found the firm approved more than 120,000 accounts without forming a reasonable belief that it knew the true identity of its customers.
Key terms
- Customer identification program (CIP)
- The written procedures a US financial institution must follow to collect and verify the identity of each customer who opens an account.
- Acceptance, Waiver and Consent (AWC)
- A FINRA settlement in which a firm consents to findings and sanctions without a hearing, usually without admitting or denying the findings.
- Identity theft prevention program (ITPP)
- A program, required under the US Red Flags Rule, to detect, prevent and mitigate identity theft in customer accounts.
Interview angle
Your firm relies on a vendor to verify new customers' identities. How would you make sure that process is reasonably designed?
Explain that the firm stays responsible for CIP. Mention written procedures for vendor mismatches and failed checks, human review of photo IDs where needed, quality testing of vendor results, and management information on approvals made despite unresolved alerts.
Sources
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