Charles
06/19 11:16
Japan’s FSA orders moomoo Securities to halt new account openings until September
Summary
Japan’s Financial Services Agency has barred moomoo Securities from acquiring new customers for three months after finding compliance, AML, and cybersecurity failures.
Regulators said the brokerage incorrectly labeled 78 non NISA eligible U.S. investment products as tax exempt assets and failed to adequately address the issue for affected clients.
Authorities also cited shortcomings in suspicious transaction monitoring, stock transfer handling, and internal governance, prompting a business improvement order and management overhaul.
The Financial Services Agency said on June 19 that moomoo Securities must stop soliciting and accepting applications for new accounts from June 19 through Sept. 18. The regulator also issued a business improvement order that requires the company to clarify management responsibility and submit a plan to prevent similar issues from recurring.
The action follows an investigation by Japan’s Securities and Exchange Surveillance Commission, which concluded that the brokerage expanded its business and introduced new services without establishing adequate compliance and risk management systems.
FSA cites NISA misrepresentations and compliance failures
Regulators said moomoo Securities incorrectly presented investment products as eligible for Japan’s Nippon Individual Savings Account program even though the products did not qualify under the tax-advantaged scheme.
The Securities and Exchange Surveillance Commission found that between early 2025 and early 2026, the brokerage displayed 78 U.S. exchange-traded funds and exchange-traded notes as NISA-eligible assets on its smartphone trading platform. The commission said retail investors subsequently purchased products that did not qualify for tax-free treatment.
Japanese authorities stated that the firm did not adequately address the issue after discovering the mistake. Regulators said the company failed to proactively contact affected customers or restore annual investment allowances impacted by the transactions.
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The watchdog also cited restrictions on domestic stock transfers. The commission said moomoo Securities had declined customer requests to move Japanese stocks to other brokerages since early 2024, limiting clients’ ability to transfer assets outside the platform.
Financial authorities said the company also failed to properly comply with anti-money laundering obligations. The commission found that more than 1,500 rejected or flagged account applicants had not undergone sufficient reviews for suspicious activity because the firm incorrectly believed screening requirements applied only to approved accounts.
Japanese regulators said the brokerage had not conducted required examinations or reporting related to suspicious transactions for an extended period.
Cybersecurity and governance concerns
The Financial Services Agency said cybersecurity controls were also inadequate. Regulators found that management failed to maintain a complete inventory of important transaction systems and did not properly assess vulnerabilities affecting critical infrastructure.
The agency ordered the company to establish clearer accountability among executives and strengthen its internal management framework. Moomoo Securities must submit a detailed business improvement plan to regulators by July 21.
Moomoo Securities is the Japanese subsidiary of Hong Kong-based Futu Holdings, an online brokerage group listed on the Nasdaq. The company has expanded rapidly through its mobile investment platform and has surpassed 2 million app downloads in Japan while promoting low-cost trading in U.S. stocks.
The enforcement action comes as other parts of the Futu group continue expanding overseas. Moomoo Crypto, a separate subsidiary under the Futu umbrella, recently extended its cryptocurrency trading services into Texas, adding to operations in California, New Jersey, and Pennsylvania. The U.S. platform offers trading in 52 digital assets and supports direct transfers between external crypto wallets and customer accounts.
The case adds to a period of heightened oversight of digital finance activities in Japan. Earlier this year, the Financial Services Agency proposed stricter standards for stablecoin reserve assets and introduced additional supervisory requirements for financial institutions involved in cryptocurrency-related services as part of broader reforms under the country’s updated digital asset framework.
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