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United Texas Bank faces regulatory action over AML issues

United Texas Bank faces regulatory action over AML issues

GrafaGrafa2024/09/05 01:25
By:Liezl Gambe

United Texas Bank, based in Dallas, Texas, has been issued a cease and desist order by the U.S. Federal Reserve and the Texas Department of Banking due to significant failures in its anti-money laundering (AML) program and corporate governance oversight. 

The regulatory action follows an examination conducted in May 2023 that revealed serious deficiencies in the bank's risk management and compliance practices, particularly concerning its oversight of foreign correspondent banking and "virtual currency customers."

The order requires United Texas Bank to take immediate steps to address these shortcomings. 

Key areas of concern highlighted by regulators include the bank's failure to ensure proper oversight of its management's compliance with federal regulations. 

The bank’s board of directors was cited for inadequate supervision, necessitating a comprehensive review of its corporate governance practices. 

The order mandates the bank to develop a written plan within 90 days to strengthen board oversight and ensure compliance with the Bank Secrecy Act (BSA), AML requirements, and Office of Foreign Assets Control (OFAC) regulations.

The enforcement action also lays out several steps for improving the bank’s AML compliance program. 

These steps include conducting an independent audit, revising customer due diligence procedures, and enhancing the monitoring of suspicious activities. 

Additionally, the bank is required to provide regular progress reports on its compliance efforts, with a clear timeline for implementing these measures. 

Failure to comply with these deadlines could lead to further regulatory actions from the Federal Reserve or other state and federal agencies.

The crypto community quickly took note of the regulatory move, with some industry leaders expressing concerns over the broad mandates regulators have on monitoring and compliance. 

Caitlin Long, founder of Custodia Bank, highlighted the increased scrutiny on banks involved with virtual currencies, while Pointsville founder Gabor Gurbacs criticised what he referred to as "selective enforcement" by regulators.

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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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