Fed Targets Bank Over Risk Management Issues

On Thursday, the U.S. Federal Reserve announced an enforcement action against Customers Bancorp (CUBI.N) due to "significant deficiencies" in the bank's risk management and anti-money laundering practices.

Following the announcement, the bank’s stock dropped significantly, plummeting over 20% during midday trading.

The enforcement action, which targets the Pennsylvania-based bank known for its digital asset services and tokenized instant payments platform, resulted from a recent examination by the Federal Reserve.

A bank spokesperson did not immediately respond to a request for comment. Although the enforcement action does not include a fine, it mandates the bank to revamp its policies to address the identified issues and provide regular progress reports to regulators.

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The order specifically instructs the bank to improve its risk management processes related to its digital assets business. This includes ensuring that staff possess the necessary expertise and resources and that emerging risk exposures are promptly addressed.

Additionally, the Federal Reserve directed the bank to enhance its customer due-diligence and suspicious activity reporting practices.

Alexander Stefanov