United Texas Bank has been issued a cease and desist order by the U.S. Federal Reserve and the Texas Department of Banking due to significant compliance deficiencies. The bank must take immediate action to rectify issues related to its anti-money laundering (AML) program and corporate governance oversight.
United Texas Bank Faces Regulatory Action for AML Failures Linked to ‘Virtual Currency Customers’
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Cease and Desist Order for United Texas Bank Cites Virtual Currency Oversight and AML Failures
United Texas Bank, based in Dallas, Texas, faces regulatory action after an examination conducted in May 2023 revealed critical deficiencies in its risk management and compliance practices. The Federal Reserve and the Texas Department of Banking found that the bank’s oversight of foreign correspondent banking and “virtual currency customers” fell short of legal requirements, specifically related to anti-money laundering (AML) and Bank Secrecy Act (BSA) compliance.
The cease and desist order requires the bank to take immediate and comprehensive steps to rectify these issues. Among the key areas of concern, the Fed noted the bank’s corporate governance practices and its board of directors’ reportedly failed to ensure adequate oversight of management’s compliance with federal regulations. The order mandates United Texas Bank to develop a written plan within 90 days that strengthens board oversight and compliance with the BSA/AML and Office of Foreign Assets Control (OFAC) regulations.
When news of United Texas Bank reached the crypto community, it quickly became a hot topic on social media platforms like X. “Another crypto bank, another enforcement action,” Custodia Bank founder Caitlin Long wrote. “Regulators have such broad mandates on monitoring and compliance that they can basically selectively enforce against anyone they want,” Pointsville founder Gabor Gurbacs remarked. “It seems wrong. Let’s see if common law can set some good precedents to destroy [these] mafia tactics,” he added.
The Fed and the Texas regulator’s enforcement action outlines several steps for improving the bank’s AML compliance program, which includes conducting an independent audit, revising customer due diligence procedures, and enhancing suspicious activity monitoring. The bank is required to provide regular progress reports detailing its compliance efforts, with a clear timeline for implementation. Failure to meet these deadlines could result in further regulatory action from the Federal Reserve or other state and federal agencies.
What do you think about the Fed’s action against United Texas Bank? Share your thoughts and opinions about this subject in the comments section below.
