Fintech
Evolve Bank Orders Fed to Tackle Money Laundering Problem, Sanctions Expire | Brief news
Evolve Bank & Trust engaged in unsafe and unsound business practices related to third-party fintech companies with which it partnered, the Fed said in a Friday Press release.
One of the third parties linked to Evolve was software-as-a-service platform Synapse, which filed for bankruptcy in May. Evolve responded to Synapse’s failure at the time in a Press release.
The details: The Federal Reserve Bank of St. Louis and the Arkansas State Bank Department discovered deficiencies in Evolve’s risk management programs in an August review. They flagged the bank’s risk management practices in its Open Banking division, which offered deposit accounts and payment processing services to fintechs, the Fed said in its report. order.
A subsequent January examination by federal and state banking regulators uncovered additional deficiencies related to the bank’s risk management and compliance programs for managing the AML program requirements of the Bank Secrecy Act (BSA) and Bank of America regulations. Department of the Treasury’s Office of Foreign Assets Control (OFAC) related to US sanctions.
Compliance Considerations: As part of the executive order, Evolve agreed to submit a report to federal and state banking regulators within 90 days to strengthen the board’s oversight of the bank’s management and operations, as well as its compliance with BSA regulations and OFAC.
The report must include written policies and procedures “to identify, manage and monitor potential risks, including compliance and fraud risks, associated with each fintech partner, product, program, service, line of business or customer” and to take measures to “enable the timely identification, measurement and reporting of risk exposures associated with each fintech partner, product, program, service, line of business or customer.” These policies and procedures must cover the onboarding and offboarding of fintech partners, as well as regular risk monitoring.
The order also requires that Evolve hire compliance personnel who “possess subject matter expertise, stature and direct access to the board of directors,” and that the bank’s compliance program must have “sufficient staffing levels” and periodically reassess resources and staffing needs.
Evolve did not respond to a request for comment.