The U.S. Federal Reserve Board has found “significant deficiencies” in Customers Bancorp, Inc.’s management of risk and adherence to anti-money laundering (AML) regulations. These issues, particularly troubling for the bank known for its crypto-friendly stance, were detailed in an enforcement action filed on Thursday.
Federal Reserve Cites Significant Deficiencies in Customers Bancorp’s AML Compliance
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The Federal Reserve’s action highlights critical concerns regarding Customers Bancorp’s handling of AML requirements, particularly under the Bank Secrecy Act (BSA) and related regulations. According to the enforcement action, recent examinations conducted by the Fed branch of Philadelphia uncovered substantial lapses in the bank’s compliance framework, including inadequate risk management practices and insufficient controls related to its digital asset strategy and dollar token activities.
These deficiencies have prompted the Fed to mandate a series of corrective measures aimed at bolstering the bank’s oversight and operational compliance. When the news broke, several crypto proponents insisted it was just another measure of attacking the crypto industry. “Customers was one of the biggest pro crypto banks out there,” Nic Carter said on Thursday.
[The] Fed and FDIC are systematically dismantling all crypto-friendly banks one after the next.
In response to the findings, Customers Bancorp has agreed to enter into a formal written agreement with the central bank, committing to enhance its board oversight and AML compliance program. This agreement outlines several critical steps the bank must take, including revising its risk management practices, improving its customer due diligence processes, and enhancing its suspicious activity monitoring and reporting mechanisms.
The bank is also required to submit detailed plans to the Federal Reserve within 60 days to address the identified issues, with ongoing progress reports mandated to ensure compliance. Despite Kamala Harris’s so-called pro- crypto stance, the Biden administration’s scrutiny of the crypto industry appears to be intensifying, as seen in the Fed’s latest enforcement action against Customers Bancorp.
With critics pointing to a broader agenda targeting crypto-friendly institutions, this latest move may signal a concerted effort to curb the growth of digital assets, regardless of the broader implications for the banking sector.
“How’s the Kamala reset going?” Carter quipped sarcastically in his X thread.
What do you think about the Fed’s action against Customers Bancorp? Share your thoughts and opinions about this subject in the comments section below.
