The Fed has issued a cease-and-desist order against United Texas Bank, a cryptocurrency-friendly bank, due to deficiencies in risk management related to customers.
On September 4, the US Federal Reserve The Federal Reserve (FED) has issued a cease and desist order to United Texas Bank, a U.S.-based bank known for providing services to cryptocurrency businesses. The order follows an inspection in May in which the Fed found “serious deficiencies” in the bank’s risk management systems, particularly in its dealings with cryptocurrency customers and foreign correspondent banking operations.
According to the Fed’s order, United Texas Bank failed to fully comply with the Bank Secrecy Act (BSA) and anti-money laundering (AML) regulations, specifically with respect to monitoring cryptocurrency customers. The Fed pointed out that the bank’s management and board of directors failed to fully exercise their supervisory responsibilities in this area.
In response to the above cease-and-desist order, the Bank has taken steps to strengthen its compliance with the BSA and its anti-money laundering (AML) program. In addition, the Board of Directors of United Texas Bank has agreed to submit a plan to enhance its monitoring of compliance with BSA/AML requirements.
Concerns about “Operation Chokepoint 2.0”
This is not the first time the Fed has taken action against a crypto-friendly bank. In August, Customers Bancorp and its subsidiary, Customers Bank, received similar cease and desist orders for deficiencies in risk management and AML compliance.
The Fed’s recent actions have raised concerns in the cryptocurrency community about a deliberate campaign to limit banks’ involvement in the industry, dubbed “Operation Chokepoint 2.0.” Dan Spuller, head of public relations for the cryptocurrency advocacy group Blockchain Association, suggested that the cease-and-desist order against United Texas Bank is part of that campaign.