Federal Reserve cracks down on crypto-friendly Customer Bancorp

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

The action follows a recent examination by the Federal Reserve Bank of Philadelphia, which uncovered significant deficiencies in the bank’s risk management and compliance practices, particularly in relation to anti-money laundering laws and the Bank Secrecy Act.

“Customers was one of the biggest pro crypto banks out there. Fed and FDIC are systematically dismantling all crypto-friendly banks one after the next,” posted author Nic Carter on X, expressing concern over the news.

The Federal Reserve believes that the bank’s board of directors should enhance their oversight and resources to manage these high-risk activities. A key focus of the scrutiny is on the bank’s digital asset strategy and instant payments platform. 

This announcement has sparked outrage in the crypto community, with accusations against the Federal Reserve and FDIC for gradually suffocating crypto businesses. 

Agreement between the Fed and Customers Bancorp

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

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

Additionally, the bank must revise its customer due diligence and suspicious activity monitoring programs. The agreement also stipulates regular progress reports to ensure adherence to the new compliance measures. 

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