- This March the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) imposed penalties against Canaccord Genuity for various violations related to providing trading services to stock scammers and working with customers such as “Individual 2” who aided several sanctioned Russian oligarchs to hide their assets.
- A footnote in the FinCEN Consent Order against Canaccord describes Individual 2’s work for Konstantin Malofeyev, who was sanctioned by the U.S. for being one of the main sources financing Russia separatism in Crimea before the full-scale invasion of Ukraine.
- An article by The Globe and Mail describes similarities of “Individual 2” with Demetris Ioannides, who runs Cyprus-based corporate services firm MeritServus, and who is reported to have worked for Konstantin Malofeyev as well as Putin-ally Roman Abramovich.
- The FinCEN Consent order also describes several stock schemes and mentions Joseph A. Padilla who was convicted for a pump-and-dump scheme. A separate SEC filing notes that Padilla enlisted four Russian nationals in his scheme who had accounts at Valor Capital, a firm linked to Ivo Zutis, who in turn was reportedly linked to Yevgeny Prigozhin, aka Putin’s Chef.
FinCEN imposes penalties of $80 million against Canaccord Genuity
In March, the U.S. Treasury’s FinCEN imposed a civil money penalty of $80 million against Canaccord Genuity LLC. This is the largest penalty ever imposed against a broker-dealer for violating the Bank Secrecy Act. According to the Consent Order, Canaccord admits to the Statement of Facts and Violations and agrees to pay the penalty.
The Consent Order notes “FinCEN is imposing a Civil Money Penalty of $80 million in this matter. FinCEN has agreed to suspend $5 million of the Civil Money Penalty pending Canaccord’s compliance with the Undertaking set forth below, and to credit against the Civil Money Penalty payments of $20 million to the SEC and $20 million to FINRA.“
The SEC charged Canaccord for failing to file Suspicious Activity Reports (SARs) in connection with its over-the-counter market making business.
The FinCEN Consent Order described conduct from 2018 through 2024 by Canaccord Genuity LLC, the U.S. subsidiary of Toronto-based Canaccord Genuity Group, that included failing to implement and maintain an Anti-Money Laundering (AML) program and not adequately detecting suspicious activity.
These penalties show how financial firms like Canaccord may be involved with sanctioned individuals and entities or customers involved in stock fraud schemes – and without adequate AML and detection programs may conduct suspicious activity that can hide sanctioned assets or defraud investors.
In addition to this being the largest penalty imposed against a broker-dealer by FinCEN, it is notable that the Consent Order mentions Canaccord’s work with “Individual 2,” who worked with several Russian oligarchs, including Konstantin Malofeyev who helped finance Russia’s invasion of Ukraine starting back in 2014 in Crimea. The Consent Order also describes several stock schemes and a convicted stock promoter who, in a separate filing, was shown to have multiple links to Russia as well.
Canaccord Genuity worked with financial fixer to Russian oligarchs
The FinCEN Consent Order described how Canaccord failed to conduct adequate anti-money laundering (AML) and customer due diligence (CDD) and provides several examples about unnamed customers and individuals. The filing describes how, in 2023, several news articles detailed Individual 2’s years-long efforts to shield wealthy Russians’ assets through an affiliate based in Cyprus.
A story in The Globe and Mail on these charges reported how “for years Canaccord Genuity conducted trades for a Russian oligarch’s financial fixer to skirt sanctions, a foreign bank flagged for a high risk of facilitating tax evasion and fraudsters conducting pump-and-dump schemes.”
The Globe and Mail noted that the articles referred to by FinCEN about Canaccord may refer to ICIJ’s Cyprus Confidential and Demetris Ioannides and MeritServus.
MeritServus, a Cyprus-based corporate services firm known for establishing offshore trusts and shell companies for its clients, was the most widely utilized of those businesses, the investigation found. MeritServus is owned by former Deloitte partner Demetris Ioannides and his two adult children.
In April, 2023, both MeritServus and Ioannides were added to the U.K. sanctions list for working on behalf of Russian billionaire and long-time Putin ally Roman Abramovich.
FinCEN and Ioannides did not respond to requests for comment on whether Ioannides is “individual 2.” An April 2023 article in The Guardian cited lawyers acting for Ioannides and MeritServus as saying they had “no involvement in any Abramovich family trusts.”
A footnote in the Canaccord FinCEN Consent Order described reporting that Individual 2 had aided sanctioned Russian oligarch Konstantin Malofeyev
One item not reported by The Globe and Mail, or elsewhere, as far as I know, is an interesting footnote about Konstantin Malofeyev.
A footnote on page 27 says:
In particular, Canaccord’s CDD records for Customer B do not reflect reporting alleging that Individual 2 aided certain oligarchs in hiding their assets, including Konstantin Malofeyev. In December 2014, OFAC designated Malofeyev as a Specially Designated National (SDN). In sanctioning Malofeyev, OFAC described him as “one of the main sources of financing for Russians promoting separatism in Crimea” and, through its designation, prohibited U.S. citizens from working for or doing business with Malofeyev. OFAC, Press Release, Treasury Targets Additional Ukrainian Separatists and Russian Individuals and Entities (Dec. 19, 2014). On April 20, 2022, Malofeyev was sanctioned again for acting, or purporting to act, on behalf of, directly or indirectly, the Government of Russia. OFAC, Press Release, U.S. Treasury Designates Facilitators of Russian Sanctions Evasion (Apr. 20, 2022).
Additionally, publicly available information pre-dating this 2023 reporting linked Individual 2’s business to Russian oligarchs; as early as 2012, Individual 2 was linked to an oligarch’s Cypriot trust. References to this information remained absent from Canaccord’s CDD files in the roughly five-year period between account opening and the third quarter of 2022.
This December 2014 OFAC press release described the sanctions against Konstanin Malofeyev. This 2022 OFAC press release was issued after Malofeyev was indicted for violating sanctions and imposed more sanctions against his network. More details are described further down in this story.
MeritServus founded by Demetris Ioannides reportedly helped manage money for Malofeyev for years after he was sanctioned
In 2023 the Guardian reported how MeritServus, founded by Demetris Ioannides who was sanctioned in the U.K. in 2023, appeared to help Konstantin Malofeyev move money around even after he was sanctioned.
An oligarch accused of financing pro-Russian separatists in eastern Ukraine appeared to continue moving millions of dollars through the global banking system with the help of a Cypriot financial services firm after he was placed under sanctions by western governments, the Guardian can reveal. The Oligarch files is a cache of documents leaked from MeritServus, which is based in Limassol and was founded by the former Deloitte partner Demetris Ioannides.
Konstantin Malofeyev, a banker whose business interests include the Kremlin-supporting Tsargrad media group, has been described by the US authorities as “one of the main sources of financing” for the promotion of Russian interests in eastern Ukraine and Crimea.
Material seemed to show that up to three years after Malofeyev was sanctioned MeritServus helped him move money and issue loans, some in U.S. dollars.
Konstantin Malofeyev was sanctioned by the U.S. in 2014 for helping Russia fund separatists in Crimea
In 2014 the U.S. Treasury sanctioned Konstantin Malofeyev, which is also sometimes spelled Molofeev, for funding separatist activities in eastern Ukraine and also sanctioned his Russian investment group Marshall Capital Fund.
Malofeyev is one of the main sources of financing for Russians promoting separatism in Crimea. Malofeyev is being designated because he is responsible for or complicit in, or has engaged in, actions or polices that threaten the peace, security, stability, sovereignty, or territorial integrity of Ukraine and has materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of the so-called Donetsk People’s Republic.
The Opensanctions website summarizes some of Malofeyev’s key positions: Chairman of the Board of Directors of the Tsargrad Group of Companies, Chairman of the Tsargrad Society, Deputy Head of the World Russian People’s Council, Founder of the Saint Basil the Great Charitable Foundation, Founder of the Tsargrad TV channel, and Managing Partner of Marshall Capital Partners.
A 2023 Radio Free Europe / Radio Liberty (RFE/RL) story reported how Russia’s ‘Orthodox Oligarch’ Konstantin Malofeyev was continuing to finance his support of Moscow’s war in Ukraine.
Malofeyev, a Kremlin-connected media tycoon who is openly infatuated with Russia’s imperialist, Orthodox heritage, has been under Western sanctions since 2014 for his role fomenting uprisings in parts of southern and eastern Ukraine and facilitating Russia’s occupation of Ukraine’s Crimea region. He is also the target of an international arrest warrant on suspicion of creating and financing illegal paramilitary formations.
Malofeyev runs the Tsargrad media network, which promoted establishing Russian control over parts of southern and eastern Ukraine. Tsargrad is a key platform for the extreme-right views of Aleksandr Dugin. RFE/RL reported on how Malofeyev has several links to information technology company AT Consulting.
In 2022 the DOJ indicted Konstantin Malofeyev for conspiracy to violate sanctions in connection with hiring American citizen Jack Hanick to work for the Russian TV Network from 2013 to 2018 and for employing Hanick to illegally transfer $10 million from a Texas bank to another business associate in Greece.
In 2024 Russian national Alexey Komov was indicted for working with Malofeyev to recruit and hire Jack Hanick and for Komov’s involvement in the $10 million illegal investment transfer. I had included Komov in this 2022 chart on Stephen Bannon, showing that Komov was tied to Bannon through the Dignitatis Humanae Institute which Bannon was backing to try to build an alt-right center near Rome (the effort failed).
In 2024 Tomas Ianchauskas, a regional leader of Malofeyev’s sanctioned Tsargrad Society, pleaded guilty to lying to the FBI.
Ioannides and his firm MeritServus reportedly managed part of Russian oligarch Roman Abramovich’s offshore holdings
The Guardian had covered how a cache of documents from MeritServus suggested the firm helped Russian oligarch Roman Abramovich manage some of his money “raising questions about whether the reorganisation was designed to avoid asset freezes.” Lawyers for Ioannides and MeritServus said their client had “no involvement in any Abramovich family trusts.“
A 2024 story by ICIJ also reported that Ioannides and MeritServus worked on trusts and shell companies controlled by sanctioned Russian oligarch Roman Abramovich since at least 2001, and that accounting firm Deloitte had ties to MeritServus even after the firm split off in 2005.
Ioannides had established the Cyprus branch of Deloitte in 1988 and he later founded MeritServus as a Cyprus-based division within Deloitte, and then in 2005 MeritServus split from Deloitte and became a separate firm. In 2023 when MeritServus came under scrutiny, Deloitte said that MeritServus was not affiliated with them since 2005. ICIJ findings, however, showed ties that appeared to last more than a decade beyond that.
MeritServus’ managing director, Demetris Ioannides, a former Deloitte partner, sat on the board of a Deloitte subsidiary in Cyprus that oversaw consulting operations in Russia, Ukraine, Belarus and other countries, and signed off on numerous management decisions, records show. What’s more, MeritServus itself served as corporate secretary of the Deloitte firm, responsible for things like meeting minutes, corporate recordkeeping and filing annual financial statements. The directorship lasted well into 2023, according to corporate records, nearly 20 years after Deloitte said it severed official ties with MeritServus.
Canaccord failed to implement reasonable controls to prevent fraud and allowed scammer to harm innocent investors
In addition to working with a fixer for sanctioned Russian oligarchs, the FinCEN Consent Order described how “Canaccord’s willful failures to adopt and implement reasonable controls to prevent fraud allowed scammers to harm innocent investors.” The filing describes suspicious activity in trading of Oncology Pharma, Inc. (symbol ONPH)
In March 2023, stock promoters Joseph A. Padilla and Kevin C. Dills were indicted on federal fraud charges for allegedly orchestrating a pump-and-dump penny stock scheme involving ONPH that generated over $150 million in illicit proceeds. Separately, in June 2023, the SEC charged Padilla and Dills for their roles in carrying out a fraudulent stock scheme involving ONPH. Both of these cases brought in 2023 revealed that during the period when Canaccord was trading ONPH, Padilla and Dills participated in a market manipulation scheme involving ONPH.
Per an SEC filing, a Cayman Islands-based broker-dealer Valor Capital, that was used in the ONPH stock scheme and several others, was secretly controlled, in part, by Joseph Padilla. The SEC filing noted that Padilla enlisted in his scheme four Russian nationals who had personal relationships with him, and each was a named holder of a Valor Capital account, as well as Russian bank accounts that Padilla used to distribute proceeds of the scheme to his partner Dills.
In 2024 the Cayman Islands Monetary Authority cancelled the registration of Valor Capital and listed Ivo Zutis as the shareholder. An OCCRP story on Yevgeny Prigozhin, who was indicted for interfering in the 2016 U.S. election and was known as ‘Putin’s Chef’, noted that three companies linked to Prigozhin listed Ivo Zitus on incorporation documents.
The Canaccord Consent Order also describes suspicious trading in Blue Eagle Lithium, Inc. (symbol BEAG) which did business under the name Wishbone Pet Products Inc. In 2022 the SEC filed a Complaint against eight individuals alleging a long-running scheme to manipulate the trading of at least seventeen microcap stocks, including BEAG.
The $80 million in penalties and the charges against Canaccord Genuity provides yet another example of how some financial firms act as facilitators for customers that may be sanctioned or are helping sanctioned people move and hide their money, and for customers that are conducting stock fraud schemes. In the case of Canaccord, there are several customers that were sanctioned and convicted of fraud, and there are multiple links to Russia and several oligarchs close to Putin.
Note: This story was updated on 3/31/2026 to correct the penalty amount from $120 million to $80 million.