Key Takeaways:

The U.S. Federal Reserve issued a cease and desist order to United Texas Bank due to risk management deficiencies, particularly regarding cryptocurrency clients.
The bank is addressing concerns related to corporate governance, AML compliance, and foreign correspondent banking.
Industry advocates see this as part of a broader governmental effort, referred to as “Operation Chokepoint 2.0,” targeting crypto-related banking.

The U.S. Federal Reserve issued a cease and desist order to United Texas Bank on September 4, citing significant risk management deficiencies, particularly regarding cryptocurrency clients.

Following a May examination, the Fed found weaknesses in corporate governance and compliance with anti-money laundering (AML) regulations and the Bank Secrecy Act (BSA).

NEWS: The U.S. Federal Reserve has issued a cease-and-desist order to crypto-friendly United Texas Bank, citing major deficiencies in its risk management and compliance with anti-money laundering laws. pic.twitter.com/aDU6yvDuNU
— CoinGecko (@coingecko) September 5, 2024

The bank’s handling of foreign correspondent banking and virtual currency customers was specifically highlighted.

In response, United Texas Bank has begun improving its AML program and compliance practices, with its board agreeing to submit a formal plan to enhance oversight.

The bank, managing around $1 billion in assets, is working to address the Federal Reserve’s concerns.

This action follows a similar cease and desist order issued to Customers Bancorp in August.

Industry advocates suggest these actions reflect broader government efforts, dubbed “Operation Chokepoint 2.0,” aimed at discouraging banks from working with the cryptocurrency sector.