The Federal Deposit Insurance Corporation (FDIC, for its acronym in English) asked Cross River Bank, known for its services to fintech and crypto companies such as Visa and Coinbase, to "self-correct" and "appropriately address" weaknesses in its activities credit.
On April 28, the FDIC released a consent order executed with Cross River Bank on March 8, alleging that the bank engaged in "unsafe" or "unsound" banking practices related to its compliance with applicable fair lending laws and regulations in 2021.
Despite accepting the consent order, Cross River has yet to admit or deny the violations discovered in the 2021 examination report. It was noted:
"The FDIC considered the matter and determined, and the Bank neither admits nor denies, that it engaged in unsafe or unsound banking practices related to its compliance with applicable fair lending laws and regulations."
The order states that the bank must take immediate steps to "increase" its focus on the bank's "system of internal controls, reporting systems, credit underwriting practices, and internal audit systems related to consumer protection laws and regulations." consumer".
In addition, the bank must monitor its compliance with fair lending laws and promptly โself-correctโ any violations.
Cross River was directed to "appropriately address" the deficiencies and weaknesses identified in the 2021 examination report and create processes to ensure these weaknesses do not appear in the future.
The FDIC requested that Cross River fully comply with the consent order in a "timely" manner.
Just one day before the consent order was made public, Cross River CEO Gilles Gade posted a statement on April 27, which did not mention the FDIC's allegations.
Gades stressed that regulatory scrutiny of banks is increasing, and suggested that Cross River take appropriate steps to ensure "transparency and accountability."
โCross River is the largest of these banking institutions, and as such, we have regulatory inspectors who review some elements of our business on an ongoing basis,โ Gades said.
โWe view our compliance capability as a strategic advantage and are proud to lead our industry in maintaining the highest levels of compliance, transparency, and accountability,โ he wrote.
Related: Crypto-friendly banks mismanaged traditional risks, FDIC chief says at Senate hearing
The order was initially issued to the bank just days before Circle, the issuer of the stablecoin behind USD Coin (USDC), partnered with Cross River for benching services, which was announced on March 13.
Circle had sought the new partnership after its previous provider, Silicon Valley Bank, it collapsed on March 11.
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