Fed Halts United Texas Bank Activities Citing Major AML and BSA Deficiencies

Fed Halts United Texas Bank Activities Citing Major AML and BSA Deficiencies

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by Giorgi Kostiuk

2 years ago

Made with AI

  1. Reasons for the Fed's Decision
  2. Actions Taken by the Bank
  3. Other Similar Cases

    4. The United States Federal Reserve (Fed) has issued a cease and desist order to the crypto-friendly United Texas Bank, citing significant deficiencies in the bank’s risk management systems and dealings with its crypto clients.

    Reasons for the Fed's Decision

    In a September 4 cease and desist order, the Fed said it had examined United Texas Bank in May and found issues with its corporate governance structure and oversight by the bank’s board of directors and senior management. The identified deficiencies were related to foreign correspondent banking and virtual currency customers, specifically risk management and compliance with applicable laws, rules, and regulations relating to anti-money laundering, including the Bank Secrecy Act (BSA). The order did not specify how the bank had not been in compliance with regulations concerning its crypto clients.

    Actions Taken by the Bank

    The Fed noted that United Texas Bank had since taken further measures to bolster its adherence to the BSA and its anti-money laundering (AML) program. The bank’s board of directors agreed to submit a formal plan to strengthen board oversight of its compliance with BSA/AML requirements.

    Other Similar Cases

    In August, the Fed issued a similar enforcement action against another crypto-friendly bank, Customers Bancorp, identifying significant deficiencies in its risk management systems and AML compliance. Customers Bancorp is already taking measures to address these deficiencies. The recent wave of enforcement actions has reignited accusations that the government is conducting a coordinated campaign to block banks from engaging with the crypto industry, something its adherents call 'Operation Chokepoint 2.0'.

    The Federal Reserve continues to closely monitor banks dealing with cryptocurrency clients to ensure compliance with anti-money laundering laws and regulations. This highlights the importance of adherence to BSA/AML requirements for all banking institutions working with virtual currencies.

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