Crypto-friendly United Texas Bank faces cease and desist order from Federal Reserve
Quick Take The central bank said it examined the Dallas bank in May 2023 and found those shortfalls in its governance and in the oversight by its board of directors and senior management. This marks the second time in a month that the Federal Reserve has issued enforcement actions against a crypto-adjacent bank.
United Texas Bank, which has ties to the crypto industry, had "significant deficiencies" involving crypto customers and how the bank manages risks, according to the Federal Reserve.
The central bank said it examined the Dallas bank in May 2023 and found those shortfalls in its governance as well as in the oversight by the board of directors and senior management.
"WHEREAS, the Examination identified significant deficiencies related to foreign correspondent banking and virtual currency customers, specifically risk management and compliance with applicable laws, rules, and regulations relating to anti-money laundering (“AML”)..." the bank said in a cease and desist order issued on Wednesday. Both the Fed and the bank agreed to that order.
United Texas Bank has since taken steps to bolster its Bank Secrecy Act and anti-money laundering program, the Fed added. Next, the bank's board of directors is required to file a written plan on how it will "strengthen board oversight of the Bank’s compliance with the BSA/AML Requirements," as well as a plan to change its "customer due diligence program," among other plans, according to the order.
United Texas Bank did not immediately respond to a request for comment.
The Texas bank has worked with crypto firms in the past, specifically with the Stellar Foundation and Circle's USDC. MoneyGram partnered with Stellar in 2021 to enable crypto payouts in local currencies for users. MoneyGram's network was integrated on the Stellar blockchain to settle USDC transactions, and United Texas Bank was the settlement bank between Circle and MoneyGram, according to previous reporting from The Block .
This marks the second time in a month that the Federal Reserve has issued enforcement actions against a crypto-adjacent bank. In August, the Fed said it found "significant deficiencies" in Customers Bancorp, Inc.'s risk management and compliance with anti-money laundering laws.
Some in the crypto industry have since accused the Fed of implementing "Chokepoint 2.0," a term used by some to speculate about the possibility of a broader, coordinated crackdown. That stance from the crypto industry continued after Wednesday's cease and desist order.
"@FederalReserve Enforcement Action: A Cease and Desist Order for United Texas Bank in Dallas as Operation #Chokepoint 2.0 Continues," said Dan Spuller, head of industry affairs at the Blockchain Association, in a post on X on Wednesday.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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