Japan’s financial regulator has ordered online brokerage moomoo Securities to halt part of its business for three months after uncovering a series of compliance, anti-money laundering, customer protection, and cybersecurity shortcomings.
In a statement made on Friday, the FSA has instructed moomoo Securities to halt the process of soliciting for and receiving applications for new accounts until the 18th of September.
Additionally, a business improvement order was made to ensure that moomoo Securities improves their internal controls and prepares a strategy to prevent a recurrence of this situation.
The move has occurred amidst a period where Japanese regulators have been monitoring crypto service providers to eliminate any illegal activity in the country.
Moomoo grew business without proper risk safeguards
The sanctions have come following an investigation carried out by Japan’s Securities and Exchange Surveillance Commission (SESC) showing that the company has grown its business and introduced various services without putting in place enough risk management and compliance mechanisms.
One of the main concerns of the investigation revolved around the handling of Japan’s Nippon Individual Savings Account (NISA) system which is an investment program designed to provide tax advantages for retail investors.
According to the regulators, moomoo Securities misclassified many of the U.S. financial instruments as qualifying for NISA accounts despite being ineligible for the program.
The SESC claimed that between January 2025 and January 2026, the broker listed 78 U.S.-based exchange-traded funds and exchange-traded notes as NISA-eligible financial instruments on its mobile trading platform. In turn, the investors invested their money thinking they can enjoy tax advantages through this instrument.
However, the regulatory body criticized the way the company responded to the situation and said that the firm did not reach out to the clients and restored their annual NISA allowance.
The investigation uncovered other customer-related issues as well. According to the watchdog, moomoo Securities had been refusing customer requests to transfer Japanese stocks to other brokerages since early 2024, limiting investors’ ability to move their assets off the platform.
Anti-money laundering controls were another major concern
Japanese authorities found that more than 1,500 rejected or flagged account applicants had not been properly reviewed for suspicious activity because the company mistakenly believed screening requirements only applied to approved accounts. Regulators said the brokerage also failed to carry out required investigations and reporting of suspicious transactions for an extended period.
The FSA’s review also highlighted weaknesses in the company’s cybersecurity practices.
According to the regulator, management had not maintained a complete inventory of important transaction systems and failed to properly assess vulnerabilities affecting key infrastructure. The agency said the findings pointed to broader governance problems as the company expanded its operations.
Moomoo Securities, the Japanese arm of Hong Kong-based Futu Holdings, has grown quickly by offering low-cost trading through its mobile investment platform. The app has attracted more than 2 million downloads in Japan as interest in online investing continues to rise.
The enforcement action comes as other parts of the Futu group continue to expand internationally. Moomoo Crypto, an independent subsidiary, has also recently expanded its cryptocurrency trading offerings in the U.S. to include Texas, which had been providing services in California, New Jersey, and Pennsylvania previously.
This incident will serve as a strong reminder for Japanese regulatory agencies that simply growing is not good enough for any business entity. As digital investing platforms become popular among retail investors, regulatory agencies have started to demand compliance systems and improved control and management in terms of financial crimes and cybersecurity.
Moomoo Securities now has until July 21 to file its business improvement plan regarding its intention to rectify the situation.
