According to Blockworks, the Federal Reserve of Philadelphia has charged Customers Bank with failures in anti-money laundering (AML) and Bank Secrecy Act (BSA) compliance. The Fed identified significant deficiencies in the bank's risk management practices and adherence to relevant laws, rules, and regulations concerning AML. Both the Federal Reserve and Customers Bancorp have entered into a written agreement to address these issues.
The agreement stipulates that Customers Bank will adopt the necessary programs within 10 days of reaching the agreement. Within 60 days of the effective date, the bank's board of directors is required to submit a written plan to the Reserve Bank. This plan aims to strengthen board oversight of the bank's management and operations in compliance with BSA/AML requirements and Office of Foreign Assets Control (OFAC) regulations. The plan will also include actions to enhance the bank's digital asset strategy and other major operations.
Additionally, the board must implement measures to improve the quality, comprehensiveness, and granularity of the information and reports reviewed by the bank's board of directors. This includes information related to its digital asset strategy and proposed activities. Customers Bank is also required to report risk exposures related to cryptocurrency and outline steps to measure and assess these risks. The Federal Reserve will mandate the bank to provide 30 days' notice before implementing any new initiatives or changes to its crypto strategy, including relationship announcements and product launches.
Earlier this summer, CoinDesk reported that Customers Bank allegedly debanked some crypto hedge funds, although the accounts were reportedly inactive. The Federal Reserve's actions highlight the ongoing scrutiny and regulatory challenges faced by financial institutions involved in the cryptocurrency sector.