David Edwards
The Federal Reserve has issued a cease and desist order to United Texas Bank, citing “significant deficiencies” in its risk management systems and dealings with cryptocurrency clients. The order, dated September 4, follows a May examination by the Fed, which uncovered shortcomings in the bank’s corporate governance and oversight by its board of directors and senior management.
The Fed identified major concerns relating to United Texas Bank’s foreign correspondent banking and its virtual currency customers, particularly its compliance with anti-money laundering (AML) laws, including the Bank Secrecy Act (BSA). While the specifics of non-compliance were not detailed, the bank has reportedly taken steps to improve its adherence to BSA and AML regulations.
The bank’s board has agreed to submit a formal plan to enhance oversight of its compliance with these requirements. United Texas Bank, which employs 75 people and manages approximately $1 billion in assets, faces increased regulatory scrutiny as the crypto sector continues to attract attention from federal authorities.
This marks the second recent instance of the Federal Reserve taking action against a crypto-friendly bank. In August, the Fed issued a similar order against Pennsylvania-based Customers Bancorp, citing deficiencies in risk management and AML practices at its subsidiary, Customers Bank.
