The Financial Industry Regulatory Authority (FINRA) fined Webull Financial $4.2 million for failing to implement adequate anti-money laundering (AML) and identity theft prevention programs.
Between January 2020 and September 2023, Webull approved the opening of more than 120,000 new customer accounts using identity verification services provided by its third-party vendors without forming a reasonable belief that it knew the true identity of those customers, according to FINRA.
As an example, the firm approved accounts for more than 50 customers who submitted photos of scenic landscapes instead of government-issued identification. In other instances, the firm approved accounts for customers despite information in the firm’s own systems indicating that the customers were deceased.
“Webull’s business grew rapidly, but its compliance program did not keep pace,” Bill St. Louis, executive vice president and head of enforcement at FINRA, said. “Firms must ensure that their supervisory systems grow with their business and address the risks they present. Webull failed to do so in fundamental areas, including verifying its customers’ identities, detecting suspicious activity and ensuring the best possible execution of customer trades. FINRA holds firms accountable when their compliance programs do not adequately address the risks created by their business.”
Over the same period, Webull failed to detect and report a variety of suspicious transactions. For example, FINRA said the company failed to identify or investigate 473 unauthorized ACH transfers used to transfer over $1.5 million from customers at other financial institutions into Webull accounts. Further, it failed to timely investigate a single account that triggered nearly 13,000 alerts for potentially manipulative trading activity in more than 100 stock symbols during the approximately 18 months the account was open.
Additionally, FINRA said Webull lacked several surveillance capabilities essential for identifying fraudulent activities occurring at the firm. The firm did not have any processes to identify potentially suspicious out-of-the-money options trading.
In addition, between January 2020 and February 2023, Webull also failed to have an identity theft prevention program reasonably designed to detect, prevent and mitigate identity theft, instead relying on a deficient customer identification program. As a result, the firm failed to detect certain red flags associated with identity theft and opened dozens of accounts for foreign nationals using the same IP address or device.
Also, FINRA also found that Webull failed to reasonably supervise for best execution and failed to conduct reasonable regular and rigorous reviews of customers’ execution quality.
In settling the case, Webull consented to the entry of FINRA’s findings without admitting or denying the charges. In addition to the $4.2 million fine, Webull agreed to certify remediation of the deficiencies in its AML and identity theft prevention programs and retain an independent consultant to address its best execution program.
In 2025, FINRA censured and fined Webull $1.6 million for failing to reasonably supervise and retain social media communications by individuals with a significant number of followers on social media that promoted the firm.