Pennsylvania-based Customers Bancorp, the parent company of Customers Bank, has been hit with an enforcement action by the US Federal Reserve, with the regulator alleging it “identified significant deficiencies” concerning the bank’s “risk management practices and compliance with the applicable laws, rules, and regulations relating to anti-money laundering (AML)”.
The central bank says that Customers Bancorp “has pursued a business strategy that involves offering banking services to digital asset customers” and also “operates an instant payments platform that allows commercial clients to make tokenized payments over a distributed ledger technology system to other commercial clients of the bank”.
The enforcement order, issued after a recent inspection by the Federal Reserve Bank of Philadelphia and free of fines, mandates the bank to “submit a written plan” to the Reserve Bank within 60 days “to improve risk management practices with respect to the organization’s digital asset strategy”.
The bank must also submit a “written revised BSA/AML compliance program acceptable to the Reserve Bank” and a written plan “to strengthen board oversight of the management and operations of the organization’s compliance with the BSA/AML Requirements and OFAC Regulations”.
“Bancorp and the Bank and the Reserve Bank have mutually agreed to enter into this Written Agreement,” the Federal Reserve says.
The regulator adds that the bank has already begun “to take measures to address the identified deficiencies in its BSA/AML compliance program”.
Customers Bank has also announced the appointment of financial industry veteran and former IRS Special Agent Allen Love as Chief Compliance and AML Officer, saying Love will “immediately begin work on strengthening Bank Secrecy Act and Anti-Money Laundering (BSA/AML) protocols for the company’s digital asset business in support of the Bank’s recent agreement with the Federal Reserve Bank of Philadelphia and the Commonwealth of Pennsylvania”.
