There will also be an examination of the activities of the crypto-friendly bank during the 2023 banking crisis.
Over the next two months, the directors of Customers Bancorp and its subsidiary Customers Bank, which are crypto-friendly and headquartered in Malvern, Pennsylvania, will enhance their writing abilities in anticipation of an enforcement action that the United States Federal Reserve Board has taken against them.
The agreement, which was dated August 5 and released on August 8, indicates that Customers Bank is already taking steps to address the deficiencies the Philadelphia Federal Reserve Bank identified in the bank’s management and Anti-Money Laundering (AML) practices. The bank did not perform well on “recent examinations and inspection.”
The small bank maintains a loyal clientele of crypto consumers and operates 23 branches in 11 states. It introduced the Customer Bank Instant Transfer (CBIT) service, which is based on a distributed ledger, on the Tassat platform in 2021. The CBIT service enables Customer Bank clients to transmit money to one another in an instant and around the clock.
Within the next 60 days, Customers Bancorp and Customers Bank were required to submit a series of documents regarding the enhancement of bank practices, as per the agreement with the Federal Reserve.
The bank will also send in a revised BSA/AML compliance program, a customer due diligence program, a revised program for reporting suspicious behavior to law enforcement and regulatory officials, and a revised OFAC compliance program all by the same date.
Additionally, Customers Bank will engage a transaction review consultant within 60 days to evaluate the bank’s transaction monitoring activity from March 1 to August 31, 2023, in order to determine whether the bank has appropriately identified and reported anomalous activities. The consultant will generate a written report regarding their discoveries.
Several crypto-friendly institutions, including Silvergate, Signature, and Silicon Valley Bank, collapsed during the period of March through August 2023, causing a crisis in the US banking industry. Throughout this period, Customers Bank kept its crypto consumers and remained solvent. Nevertheless, it restricted deposits on CBIT to 15% of its total deposits.
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