Philadelphia Fed Charges Customers Bank With Compliance Failures, Demands Overhaul

The Federal Reserve of Philadelphia has taken action against Customers Bank, charging the institution with significant anti-money laundering and Bank Secrecy Act compliance failures.

What Happened: According to the central bank’s filing, the Fed has found “significant deficiencies related to the Bank’s risk management practices and compliance with the applicable laws, rules and regulations relating to anti-money laundering,” according to a Blockworks report.

This revelation has raised concerns about the bank’s overall operations and its handling of digital assets.

As part of the written agreement entered into by both the Fed and Customers Bancorp, the bank will be required to adopt new programs within 10 days of the agreement’s effective date.

This includes a mandate for the bank’s board of directors to submit a comprehensive plan to the Reserve Bank, outlining steps to strengthen its oversight of the bank’s compliance with anti-money laundering and OFAC regulations.

“Within 60 days of the effective date of this Agreement, the board of directors of the Bank shall submit a written plan to the Reserve Bank to strengthen board oversight of the management and operations of the Bank’s compliance with the BSA/AML Requirements and OFAC Regulations,” the filing stated.

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The plan is expected to address the bank’s digital asset strategy and other major operations, as well as measures to improve the quality and granularity of the information provided to the board of directors in their oversight role.

Notably, Customers Bank will also be required to report on its risk exposures related to cryptocurrency, and the steps it plans to take to measure and assess those exposures.

Furthermore, the Fed will mandate that the bank provide the Reserve 30 days’ notice prior to implementing any initiatives or changes to its crypto strategy, including relationship announcements and product launches.

This development comes on the heels of a recent CoinDesk report, which suggested that Customers Bank had allegedly debanked some crypto hedge funds, though the accounts were reportedly inactive at the time.

The unfolding situation with Customers Bank and its compliance challenges is expected to be a key discussion topic at Benzinga’s Future of Digital Assets event on Nov. 19.

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