- Chief Compliance Officer and VP of Legal Affairs, Arrow Electronics
By 
Aaron Nicodemus2023-01-27T20:57:00
The Federal Reserve Board denied the application of a digital-first bank for membership in the Federal Reserve System, citing weaknesses in the bank’s anti-money laundering (AML) protocols as part of its decision.
The Fed announced its conclusion regarding Wyoming-based Custodia Bank in a press release Friday. Custodia applied in October 2020; membership would have ensured its customer deposits would be covered by the Federal Deposit Insurance Corporation (FDIC).
The board said it found the bank’s risk management framework was “insufficient to address concerns regarding the heightened risks associated with its proposed crypto activities, including its ability to mitigate money laundering and terrorism financing risks.”
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The Federal Reserve Board further expounded on the risk management deficiencies it found at Custodia Bank as part of the digital-first bank’s application to become a member of the Federal Reserve System.
Three federal banking regulators issued guidance on the risks posed by the use of third-party financial technology firms to deliver bank deposit products and services to customers.
RTX Corp., the parent company of Raytheon, disclosed in a public filing it has reserved $1.24 billion to resolve legacy legal matters with the Department of Justice, Securities and Exchange Commission, and Department of State.
A lack of risk visibility is causing companies to reject customers–and potentially lose money–over fears they might be in danger of violating rules around anti-money laundering and sanctions regulations.
The Treasury Department’s Financial Crimes Enforcement Network updated an alert first issued in February warning financial institutions of Israeli extremists fomenting violence in the West Bank.
A Bank of England report warned of private equity risk management deficiencies as interest rates remain stagnant, with international coordination important.
