Fed cites AML weaknesses in denying Custodia Bank membership application
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.”
Related articles
-
News BriefFed details Custodia Bank membership rejection over risk deficiencies
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.
-
PremiumDiscover, in allowing misclassification problem to fester, pushed compliance aside
Federal banking regulators have laid the blame for Discover Financial Services charging merchants $1 billion in excessive credit card fees over 17 years squarely at the feet of company executives.
-
News BriefU.S. Labor Department advances sweeping deregulation push targeting worker protections
The U.S. Department of Labor (DOL) appears to be in the process of deregulating work rules. Some of the changes proposed would result in a reduction of pay for certain health workers and allow minors to work hazardous jobs.
More from Risk Management
-
News BriefFederal Reserve Board drops reputational risk from exams, aligning with OCC and FDIC shift
Bank examiners at the Federal Reserve Board will no longer assess reputational risk during examinations, a concession to the banking industry already underway with two other U.S. regulators.
-
News BriefCOSO’s draft corporate governance framework provides roadmap to compliant business practices
Corporate governance is, all too often, handed down from generation to generation. Like a well-worn jacket, it works great—until it doesn’t. Typically, it is a crisis that forces companies to reassess their corporate governance framework, as gaps are filled and poor policies rewritten. But it doesn’t have to be that ...
-
News BriefInvestment scammers, other fraudsters scored billions from consumers in 2024, FTC reports
The public reported a 25 percent increase in losses–totaling more than $12.5 billion in 2024–to investment scams, tech rip-offs, and general fraud, according to an analysis by the Federal Trade Commission.