Local banks in Montana and Texas received enforcement orders from the Federal Reserve on Wednesday, Montana for allegedly violating the National Flood Insurance Act and Texas for allegedly violating the Bank Secrecy Act.
First Interstate Bank, based in Billings, Montana It must pay $70,000 into the National Flood Insurance Program. The NFIA requires proper insurance for properties in designated flood zones, requires banks to monitor whether the properties they lend to are protected, and imposes penalties for repeated violations. Penalties of up to $2,000 per violation could be imposed, according to the order.
The move comes as First Interstate is in the midst of a search for a new chief executive officer. CEO Kevin Reilly made the announcement: Intention to resign In June.
The Fed has invested in Dallas-based United Texas Bank. Cease and desist order on money laundering issueThe Texas Department of Banking also signed and supported the order.
The Fed and TDB investigation into United Texas found “significant deficiencies” in the bank’s risk management and compliance regime for dealings with “foreign correspondent banking and cryptocurrency clients.”
As a result of the cease and desist order, United Texas will revamp its AML oversight and corporate governance practices, customer due diligence practices, and suspicious activity monitoring and reporting. It must submit a written plan to regulators within 60 days.
Dan Sparrer, executive director of the cryptocurrency lobbying group Blockchain Association, said: Posted on social media site X The enforcement order against United Texas is a continuation of the Biden administration’s “Operation Chokepoint 2.0,” a coordinated crackdown on cryptocurrency companies. Crypto-Friendly Banks Custodia also confirmed the alleged operation earlier this week.
Niko Demchak, legal director at crypto compliance firm AMLBot, said: Decryption Enforcement orders like the one United Texas received can have implications that go beyond the bank in question.”[E]“Each cease and desist order plays an important role in the market,” he told Decrypto.
“Other banks will likely get more information about what specifically did not comply with current AML regulations and will seek to improve their own internal AML processes,” Demchak said. “The mention of crypto assets will be a warning to other banks that handle crypto assets to review their risk management systems to ensure all risks are considered and mitigated.”
The enforcement order against the bank did not disclose the specifics that triggered the enforcement action.The Fed declined to comment beyond the press release and related orders.
The banks did not immediately respond to requests for comment.
