Federal Reserve cracks down on crypto-friendly Customer Bancorp

The Federal Reserve has imposed strict regulatory and compliance measures on Customers Bancorp, Inc. and its subsidiary, Customers Bank.

This decision follows a recent review of the Federal Reserve Bank of Philadelphia that uncovered significant deficiencies in the bank’s risk management and compliance practices, particularly regarding anti-money laundering laws and the Bank Secrecy Act.

“Customers was one of the biggest pro-crypto banks out there. The Fed and FDIC are systematically eliminating every crypto-friendly bank one by one,” writer Nic Carter wrote on X, expressing concern about the news.

The Federal Reserve believes the bank’s board of directors should increase its oversight and resources to manage these high-risk activities. The primary focus of the review is the bank’s digital asset strategy and instant payments platform.

As I reported earlier, US banks are quietly deplatforming businesses that have any crypto-related business. Operation Chokepoint 2.0 is back. Bank regulators are quietly threatening bank CEOs and CCOs with shutting down their crypto businesses and operations. https://t.co/ykFWHLNQAt

— Gabor Gurbacs (@gaborgurbacs) August 8, 2024

This announcement sparked widespread outrage in the crypto community, with accusations being leveled at the Federal Reserve and FDIC for increasingly stifling cryptocurrency companies.

Agreement Between the Fed and Customers Bancorp

Under the written agreement, Customers Bancorp and Customers Bank will submit detailed plans within 60 days to address these deficiencies.

These plans should outline steps to strengthen board oversight, improve risk management, and increase compliance with requirements and Office of Foreign Assets Control regulations.

The bank is also required to review its customer due diligence and suspicious activity monitoring programs. The agreement also calls for regular progress reports to ensure compliance with the new compliance measures.

Customers Bancorp and Customers Bank agreed to these terms as part of their commitment to improve their compliance posture and regulatory confidence.