The United States National Futures Association (NFA) has ordered OANDA Corporation, an NFA Member retail foreign exchange dealer and futures commission merchant headquartered in Toronto, Canada, to pay a $200,000 fine.

The Decision, issued by NFA’s Business Conduct Committee (BCC), is based on a Complaint issued by the BCC and a settlement offer submitted by OANDA. The BCC found that OANDA failed to submit accurate daily forex reports to NFA and failed to supervise.

As FX News Group has reported, the NFA complaint noted a raft of alleged violations, including OANDA’s failure to implement an adequate anti-money laundering program.

In particular, in May 2018, OANDA was acquired by a subsidiary of a private equity firm (CVC Capital Partners). The acquisition closed in October 2018. Starting at about the time of the acquisition, NFA said it noted an increase in the number and degree of deficiencies occurring at the firm. NFA identified these areas of deficiency to OANDA on separate occasions in 2018 and 2019 and instructed the firm to correct the deficiencies.

When NFA examined OANDA again in 2020, the firm had repeat deficiencies in several of the areas that NFA had identified previously to the firm.

For instance, during NFA’s 2020 exam of OANDA, NFA learned that a US-based OANDA customer had contacted the firm and complained that his account was hacked. The customer informed OANDA that, without his authorization, $5,000 had been transferred out of his account and into a UK bank account he did not recognize. Prior to that unauthorized transfer, an unknown individual had added a UK bank account to the U.S. customer’s profile with OANDA.

The addition of a new, out-of-country account to a customer’s profile was suspicious activity covered under the red flags set out in OANDA’s AML procedures. Additionally, the request to transfer funds to an account that differed from the one the customer had used to deposit funds into his OANDA account was also suspicious activity covered under the red flags set out in OANDA’s AML procedures.

OANDA’s AML procedures required staff who observed red flags with respect to an account to report the suspicious activity to the firm’s AML Compliance Officer immediately.

However, OANDA staff failed to abide by the firm’s AML procedures and failed to notify OANDA’s AML Compliance Officer immediately of the suspicious activity set out above.

OANDA’s failure to abide by its AML procedures was a repeat deficiency from NFA’s 2018 exam.

Furthermore, contrary to OANDA’s written customer complaint procedures, NFA’s 2020 exam revealed that the firm’s customer service personnel frequently failed to flag customer communications as complaints, even though the communications met the complaint criteria outlined in OANDA’s procedures.

Because these complaints were never flagged at the customer service level, they were never escalated to compliance personnel for review as set out in the customer complaint procedures. Additionally, the 2020 exam revealed that OANDA repeatedly failed to adequately document customer complaints and their resolution, contrary to OANDA’s customer complaint procedures.

The 2018 exam of OANDA had also revealed that the firm repeatedly failed to properly flag and document customer complaints and their resolution. Although OANDA undertook corrective action regarding the handling of customer complaints after both the 2018 and 2020 exams, this corrective action was insufficient.

In addition, the NFA complaint notes that, over an approximately one-month period in January and February 2020, OANDA submitted six daily forex reports to NFA that contained inaccurate unrealized profit/loss (UPL) figures. Each of the six reports set forth UPL figures that had been copied exactly from the previous day’s daily forex report. OANDA corrected the reports after the filing deadline had passed.

OANDA’s failure to make accurate filings under NFA Financial Requirements Section 13 is a repeat deficiency.

For example, in 2019, OANDA made a total of 12 inaccurate daily forex reports—including reports with inaccurate UPL figures. OANDA self-corrected some of these inaccuracies before the filing deadline had passed, but others were only corrected when NFA prompted OANDA do to so.

Finally, OANDA failed to meet its obligation to diligently supervise its forex business and its employees.

Over the last two years, NFA identified the areas of deficiency to OANDA and instructed the firm to correct the deficiencies. Concurrently, NFA informed the firm of the seriousness of the deficiencies and that continued deficiencies could subject the firm to disciplinary action.

The NFA complaint states that “Nevertheless, NFA found that OANDA continued to fail to abide by its AML procedures; to adopt and enforce an adequate ISSP, including providing required training on the ISSP; to implement its written supervisory system for handling and resolving customer complaints; and to make accurate daily forex filings to NFA”.

This last paragraph does not form part of the final settlement but is included in the original complaint.

Let’s note that OANDA has accepted to pay a $200,000 fine without admitting or denying the findings in the NFA complaint.