February 5, 2023

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US Crypto Bank Hit With Cease And Desist Order From The OCC

The Office of the Comptroller of the Currency (OCC), has issued a cease and desist...

The Office of the Comptroller of the Currency (OCC), has issued a cease and desist order to Anchorage Digital Bank. This order was issued after the OCC found that the digital bank, which received a conditional national bank charter in January 2021, was not in full compliance with KYC and AML requirements. 

Details of the Order

According to the order from the OCC, the digital bank will have to revamp its KYC and AML requirements. Additionally, it will have to accelerate hires to ensure it remains compliant with the law. Besides that, a bank secrecy officer will have to oversee the bank’s compliance with the Bank Secrecy Act, which is the basis for banking AML and KYC rules in the US. Another stipulation is that the bank will have to form a compliance committee, which will comprise at least three members. Finally, it will have to review all existing high-risk clients.

In its order, the Acting Comptroller of the Currency, Michael J. Hsu, said that all nationally chartered banks were held to the same high standards whether they engaged in traditional or novel activities. He said that when any bank failed to comply, they would take action and hold them accountable to ensure they comply with federal regulations.

Bank Consents

GEM-TRX

According to the announcement, the bank has already consented to all findings made by the regulator. It said that it was committed to taking all steps to remedy deficiencies identified by the OCC.

What is the Anchorage Crypto Bank?

Anchorage received a conditional national charter in January 2021 from the OCC. It became one of only three crypto banks to receive some sort of approval from the federal regulator. What it means is that the bank is legally allowed to handle crypto on behalf of its clients. That means willing clients can use the bank’s custody services to store their crypto. Those who do so will enjoy the full protection of US federal bank regulations.

The OCC first announced that it would allow US banks to offer crypto custody services in 2020. Since the announcement, the largest banks in the US have not jumped at the opportunity to offer these services to their customers. Instead, nascent institutions have come up, whose main service is crypto custody services. One reason for the hesitance might be the lack of a cohesive federal law on crypto in the US. As a result, mainstream banks in the US have opted not to take on any additional risk that might come with offering such a service.

However, smaller companies have not shied away from trying to offer this service to their custody. For instance, Circle CEO Jeremy Allaire told a Bloomberg reporter that the company plans to apply for a federal banking charter soon. If approved, it would make Circle the first crypto company to obtain a federal banking license in the US.

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Source: visionary-finance.com