- The Federal Reserve issued a cease-and-desist order against United Texas Bank for AML compliance failures, especially with crypto clients.
- A May 2023 examination revealed deficiencies in the bank’s governance, risk management, and adherence to the Bank Secrecy Act (BSA).
- United Texas Bank must submit corrective action plans, including enhanced internal controls and improved customer due diligence within 60 days.
The Federal Reserve recently issued a cease-and-desist order against United Texas Bank, citing major shortcomings in the bank’s compliance with anti-money laundering (AML) laws, particularly in its dealings with cryptocurrency clients. The Federal Reserve Bank of Dallas, in collaboration with the Texas Department of Banking, conducted an examination in May 2023 that revealed these deficiencies.
Corrective Action Required: Bank’s Crypto Oversight Plan
United Texas Bank, a state-chartered bank and member of the Federal Reserve System, was found to have significant lapses in corporate governance, risk management, and compliance related to its crypto customers. The examination pointed out that the bank failed to adhere to the Bank Secrecy Act (BSA) and other federal regulations aimed at preventing money laundering.
The investigation highlighted concerns about the bank’s oversight of foreign correspondent banking and crypto transactions, which are high-risk areas in the financial sector. The Fed stressed that the board of directors and senior management had not implemented adequate controls to monitor and mitigate these risks.
As part of the consent order, United Texas Bank must submit plans to address these deficiencies. These plans include strengthening the board’s oversight of the bank’s compliance with BSA/AML laws, enhancing its internal controls, and improving its customer due diligence processes. Additionally, the bank is required to upgrade its suspicious activity monitoring and reporting systems to ensure compliance with legal requirements.
United Texas Bank must also overhaul its customer due diligence program within 60 days. The revised program should ensure comprehensive customer information collection, assign risk ratings, and develop methods to identify and address high-risk customers. A new suspicious activity monitoring and reporting program is also required, focusing on timely detection and reporting of illegal activities.
Lastly, the bank must enhance its compliance with OFAC regulations by submitting a detailed plan within 60 days. This plan should cover improved screening procedures, risk assessment methodologies, and ongoing employee training.
The Federal Reserve has specified that United Texas Bank will need to provide quarterly progress reports on its compliance efforts. These reports, approved by the bank’s board, will outline the actions taken to meet the order’s requirements and their outcomes. The bank must adopt and implement the approved plans promptly, and any amendments to these plans require prior written approval from the Supervisors.
Related Reading | XRP Price Predictions: May vs. September 2025, What’s Next?
