FINRA Fines Webull $4.2M for AML Lapses
The Financial Industry Regulatory Authority fined Webull Financial $4.2 million, alleging that its anti-money laundering compliance oversight didn’t keep pace with strong multi-year growth.
According to the settlement order, Webull also failed to implement identity theft prevention and best-execution practices during its significant growth between January 2020 and September 2023.
“Firms must ensure that their supervisory systems grow with their business and address the risks they present,” FINRA Enforcement Head Bill St. Louis said. “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.”
Webull Financial is an online investment platform and brokerage offering self-directed services for retail customers. The firm grew rapidly as interest in self-directed trading increased; according to FINRA, by 2023, it had 7 seven million customer accounts and executed billions of shares over several years.
According to FINRA’s settlement, between 2020 and 2023, Webull approved the opening of more than 120,000 customer accounts using third-party vendor verification services, but without evidence that it knew customers’ true identities.
In some cases, customers submitted photos of landscapes instead of government identification, and in other instances, Webull approved customer accounts despite having information suggesting those customers were dead. Additionally, the firm’s manual reviews were conducted by individuals responsible for reviewing an “unreasonably high volume” of accounts monthly, and weren’t given guidance on how to do so, FINRA claimed.
Simultaneously, Webull allegedly failed to detect hundreds of suspicious transactions, including 473 unauthorized ACH transfers that sent over $1.5 million from customers at other institutions. Webull also allegedly failed to investigate a single account that triggered nearly 13,000 manipulative trading activity alerts in the 18 months the account was open.
The firm also failed to detect potentially fraudulent activities, including suspicious options trading and instances in which unrelated clients traded from the same address or device.
For identity theft prevention, Webull relied on a third-party vendor that allegedly missed red flags; as a result, the firm opened accounts for foreign nationals using the same IP address or device and didn’t follow up when multiple accounts were opened with the same Social Security number.
Additionally, the firm failed to supervise for best execution reasonably; according to FINRA, at times Webull failed to review execution quality for non-marketable orders, which could make up as much as 70% of its order flow during certain periods.
Webull didn’t admit or deny the findings, but, in addition to the fine and censure, agreed to remedy the alleged deficiencies in its AML and identity theft prevention programs and to engage an independent consultant to address its best-execution issues. Webull did not return a request for comment prior to publication.
The latest FINRA fine isn’t Webull’s first brush with regulators. In 2023, FINRA fined Webull $3 million, alleging it fell short in screening customers for options trading (in some cases approving people under 21 who couldn’t possibly have had the required three years’ options trading experience).
In 2025, FINRA fined the firm $1.6 million for failing to properly supervise social media “finfluencers” who promoted the firm online. In 2024, Webull paid $125,000 to settle allegations by the Securities and Exchange Commission that the firm filed “multiple deficient” Suspicious Activity Reports over several years.
The firm is also under increased scrutiny from Congress; last month, the House Select Committee on China released a report alleging the firm posed a national security threat to U.S. investors.
Investigators led by Reps. John Moolenaar (R-Mich.) and Ro Khanna (D-Calif.) argued that the firm has not been transparent about its links to China, alleging that the company’s practices exposed American investors’ data to Chinese surveillance risks and that its ownership structure was controlled by executives linked to that country.
Khanna said that “custodians of Americans’ financial data and savings should strive for transparency with the customers they serve. Webull should be forthright about its connections to the (People’s Republic of China), rather than seemingly seeking to minimize them.”
In a response, Webull claimed that the report drew “sweeping conclusions about Webull from an incomplete record, and it gets important facts wrong.” The firm alleged it cooperated fully with the China Committee in late 2024 but received no further communications for nearly two years, and argued it wasn’t given an opportunity to respond before the report was published.
