The U.S. Federal Reserve told United Texas Bank to stop what it was doing and said there were “significant deficiencies” in the bank’s risk management processes, especially when it came to working with cryptocurrency customers. The order comes after the bank was looked at in May and problems were found with its corporate governance, monitoring by top management, and compliance with the Bank Secrecy Act (BSA) and anti-money laundering (AML) rules.
The Federal Reserve’s review found problems with how the bank handled crypto-related operations and foreign correspondent banking. The bank’s risk management methods also did not meet regulatory standards. Even though United Texas Bank hasn’t said exactly what rules it broke with its crypto clients, it has become more compliant with BSA/AML standards since then.
The bank’s board of directors has decided to make a written plan to make sure that its compliance programs are better supervised. United Texas Bank, which has 75 employees and manages funds worth about $1 billion, has promised to fix the problems that have been found.
The Federal Reserve is going after a number of banks that work with the cryptocurrency business, and this move against United Texas Bank is part of a larger crackdown on crypto-friendly banks. Customers Bank, a lender in Pennsylvania, got a similar “cease and desist” order in August for the same kinds of problems.
Concerns have grown in the cryptocurrency community because of these enforcement measures. Some people think the government is trying to keep banks from getting involved in the crypto business. “Operation Chokepoint 2.0” is what crypto supporters have called this alleged attempt to limit banking services for crypto companies.
