• The Federal Deposit Insurance Corporation (FDIC) issued a cease-and-desist order to Cross River Bank for “self-correcting” compliance issues with fair lending laws and regulations.
• The consent agreement requires the bank to implement processes that will prevent future violations and submit an independent third party report by May 7th.
• Cross River Bank has not admitted or denied any of the FDIC’s allegations, maintaining that they maintain “the highest levels of compliance.”
FDIC Sends Cease-and-Desist Order to Crypto Friendly Bank
The Federal Deposit Insurance Corporation (FDIC) recently sent a cease-and-desist order to Cross River Bank in order to “self-correct” its compliance issues with fair lending laws and regulations. This action follows a 2021 Report of Examination which identified vulnerabilities in the bank’s lending operations.
Consent Agreement Requires Greater Oversight & Control
In response, the FDIC requested that the bank implement greater oversight and control through a consent agreement (consent order). The 34 page document outlines the requirements for implementing processes that will help them avoid similar occurrences in the future as well as submitting an independent third party report by May 7th.
Bank Maintains Compliance Despite Allegations
Despite these allegations, Cross River Bank maintains that they are operating with “the highest levels of compliance” without admitting or denying any of the FDIC’s claims. This was confirmed in a statement issued by CEO Gilles Gade before the regulator published their consent order on April 28th.
Action Unrelated To Cryptocurrency Activities
A spokesperson from Cross River also noted that this action has nothing to do with their cryptocurrency activities. This would suggest that any previous rumors regarding this were unfounded and likely stemmed from speculation due to their association with various fintech and cryptocurrency companies.
It is clear from this situation that even crypto friendly banks face increased scrutiny from regulators when it comes to meeting their respective regulatory requirements for fair lending practices. It remains yet unseen how this particular case will pan out but it serves as an important reminder for all financial institutions in regards to addressing such matters promptly and thoroughly if they wish to remain compliant going forward.