FINRA Fines Webull $4.2 Million Over Anti-Money Laundering & Trading Oversight Failures

Key Takeaways

• $4.2 Million Fine: FINRA fined and censured Webull for deficiencies in its anti-money laundering controls, identity theft prevention program and best execution supervision.
• Customer Verification Failures: Webull approved more than 120,000 accounts without reasonably establishing customers' identities, including accounts supported by landscape photographs and applications associated with deceased individuals.
• Suspicious Activity Monitoring: The firm failed to identify or investigate 473 unauthorized ACH transfers involving more than $1.5 million and did not timely investigate nearly 13,000 trading alerts associated with a single account.
• Best Execution Violations: Webull failed to conduct adequate execution quality reviews, with certain supervisory violations continuing through at least October 2025.
• Remediation Required: Webull must certify corrections to its anti-money laundering and identity theft prevention programs and retain an independent consultant to address its best execution program.

Deep Dive

The Financial Industry Regulatory Authority (FINRA) has fined Webull $4.2 million for widespread failures in its anti-money laundering controls, identity theft prevention program and oversight of customer trade execution, citing deficiencies that persisted for years as the online brokerage rapidly expanded.

The regulator found that Webull approved more than 120,000 customer accounts between January 2020 and September 2023 without taking adequate steps to verify applicants' identities. In some cases, the firm accepted photographs of scenic landscapes instead of government-issued identification. Other accounts were approved despite information in Webull's own systems indicating that the applicants were deceased.

The failures extended well beyond account openings. Webull failed to identify or investigate 473 unauthorized bank transfers involving more than $1.5 million and did not timely investigate nearly 13,000 alerts for potentially manipulative trading associated with a single account. FINRA also found that the brokerage failed to conduct adequate reviews of the execution quality available to its customers at competing trading venues.

The November 4 settlement requires Webull to certify that it has corrected deficiencies in its anti-money laundering and identity theft prevention programs and retain an independent consultant to address its best execution program. Webull consented to FINRA's findings without admitting or denying them.

“Webull's business grew rapidly, but its compliance program did not keep pace,” said Bill St. Louis, FINRA's executive vice president and head of enforcement.

The settlement requires Webull to certify that it has corrected deficiencies in its anti-money laundering and identity theft prevention programs and retain an independent consultant to address its best execution program. The firm consented to FINRA's findings without admitting or denying them.

Thousands of Alerts and Millions in Unauthorized Transfers

Webull relied on third-party vendors to verify customer identities, but FINRA found that the firm failed to maintain adequate procedures for determining whether the information those vendors processed was sufficient to establish an applicant's identity.

The accounts approved using landscape photographs were among the more conspicuous examples. Others were opened despite information already available to Webull indicating that the applicants were deceased.

The failures extended into the firm's monitoring of transactions after accounts had been opened. Between January 2020 and September 2023, Webull failed to identify or investigate 473 unauthorized Automated Clearing House (ACH) transfers that moved more than $1.5 million from customers at other financial institutions into Webull accounts.

In another case, a single account generated nearly 13,000 alerts for potentially manipulative trading involving more than 100 stock symbols during approximately 18 months. Webull failed to investigate those alerts in a timely manner. FINRA did not establish that each flagged transaction involved market manipulation. Its finding concerned Webull's failure to investigate activity that warranted scrutiny under its anti-money laundering obligations.

The regulator also identified significant gaps in the firm's surveillance capabilities. Webull had no process for detecting potentially suspicious out-of-the-money options trading and lacked monitoring designed to identify unrelated customers trading from the same address or device. Its surveillance for fraudulent account takeovers was also inadequate to detect such activity promptly.

Those deficiencies left the firm without reasonable means of identifying several categories of suspicious activity that brokerages are expected to monitor. Webull's identity theft prevention program suffered from related weaknesses. Between January 2020 and February 2023, the firm relied on its deficient customer identification program rather than maintaining a reasonably designed program to detect, prevent and mitigate identity theft.

As a result, Webull failed to identify certain warning signs, including dozens of accounts opened for foreign nationals using the same IP address or device. Until August 2021, it also lacked a process for checking whether unrelated customers had opened accounts using the same Social Security number.

The findings exposed weaknesses in two related but separate compliance responsibilities. A customer identification program is intended to establish that a brokerage reasonably knows who its customers are. An identity theft prevention program must also identify and respond to indications that identifying information may be used fraudulently.

FINRA found that Webull's procedures were inadequate in both respects.

Execution Quality Reviews Left Major Portions of Trading Unexamined

The regulator's findings also reached Webull's handling of customer trades, where supervisory deficiencies continued beyond the period covered by the anti-money laundering violations.

Under FINRA Rule 5310, brokerages must exercise reasonable diligence to identify the best available market for customer orders and seek execution prices as favorable as possible under prevailing market conditions. Firms are also required to conduct regular and rigorous reviews of execution quality. Webull failed to meet those supervisory obligations, according to FINRA.

At certain points between at least February 2020 and at least May 2025, the firm conducted no review of execution quality available at competing market centers. During other periods, it obtained competing-market data but failed to examine it sufficiently.

The deficiencies affected a substantial portion of Webull's business. Non-marketable orders accounted for approximately 60% to 70% of its order flow during certain periods, yet the firm failed at various points to review execution quality for those orders. Webull also failed to conduct required reviews by order type or on a security-by-security basis.

The brokerage received payment for order flow during the period examined by FINRA. Under such arrangements, trading venues compensate brokerages for directing customer orders to them. The practice does not relieve a brokerage of its obligation to seek favorable execution outcomes or to assess the quality available at competing markets.

FINRA's findings concerned Webull's failure to conduct adequate reviews and supervision. They did not establish that every affected customer received an inferior execution price. The settlement requires Webull to retain an independent consultant to address the deficiencies in its best execution program.

The GRC Report is your premier destination for the latest in governance, risk, and compliance news. As your reliable source for comprehensive coverage, we ensure you stay informed and ready to navigate the dynamic landscape of GRC. Beyond being a news source, the GRC Report represents a thriving community of professionals who, like you, are dedicated to GRC excellence. Explore our insightful articles and breaking news, and actively participate in the conversation to enhance your GRC journey