TradeStation Securities agreed to pay $1.11 million to settle potential civil liability for 481 apparent violations of U.S. sanctions rules after the Florida-based brokerage provided services to people in Iran, Syria, and Crimea, the U.S. Treasury Department said Tuesday. 

The Office of Foreign Assets Control (OFAC) said the violations stemmed from a series of sanctions-compliance failures that allowed customers in those jurisdictions to execute securities trades through TradeStation’s mobile platform for nearly a year, with the 481 trades totaling about $4.44 million. The agency said the case was deemed non-egregious and and that the brokerage voluntarily self-disclosed. 

The firm’s troubles were due in part to proprietary software introduced in 2018 that rendered a second layer of IP geo-blocking ineffective on its mobile platform because it detected the address of a U.S.-based server rather than the user’s actual location, OFAC said. A second failure followed on June 21, 2021, when an employee did not reenable a first-tier geo-blocking control after disabling it for a software update, leaving that control effectively off until at least June 15, 2022. 

TradeStation lacked effective testing to ensure its controls were working as intended, OFAC said. The agency said the firm discontinued an automated testing tool in November 2021 without replacing it, and failed for more than eight months to act on the disappearance of once-daily alerts from a third-party service flagging access attempts from sanctioned jurisdictions after a subscription lapsed. 

In the settlement, the office underscored the need for financial firms to regularly test and audit sanctions controls, warning that even well-designed compliance programs can be undermined by human and technical error.

Read more at OFAC