• U.S. regulators were investigating crypto-friendly Signature Bank over its anti-money laundering practices before the bank’s sudden collapse this weekend.
• The Department of Justice and Securities and Exchange Commission were scrutinizing the company’s records to see if it was properly monitoring transactions for money laundering.
• Chair Gary Gensler of the SEC revealed they would investigate further and bring any violations of federal securities laws to justice.
Signature Bank Faced Criminal Probe Before Collapse
U.S. regulators were probing crypto-friendly Signature Bank to see whether it scrutinized client transactions as part of its anti-money laundering practices before its sudden collapse over the weekend, according to a report from Bloomberg citing people familiar with the matter.
Investigation by DOJ & SEC
Investigators from both the Department of Justice (DOJ) in Washington and Manhattan, as well as people from the Securities and Exchange Commission (SEC), had been scrutinizing the bank’s records prior to its closure. Prosecutors from the DOJ were looking into whether or not proper steps had been taken by Signature Bank in order to fight money laundering, such as examining account holders and monitoring their transactions.
Comment From Gary Gensler
Chair Gary Gensler of the SEC commented on Sunday when authorities announced they were shutting down Signature Bank, saying that if they found any violations of federal securities laws then they would investigate further and enforce actions accordingly. It remains unclear when exactly this investigation began or if it led directly to regulators closing down Signature Bank, as no misconduct has yet been accused by staff members at this time.
Loss Of Faith In Management
Regulators also revealed that their confidence in Signature Bank’s management had waned before its closure, due to findings from an independent audit that showed various shortcomings in their internal controls against money laundering risks. This caused them to terminate Signature Bank’s Federal Deposit Insurance Corporation (FDIC) insurance agreement on Saturday night which resulted in an immediate shutdown of all operations come Sunday morning.
Conclusion
All customers have since received confirmation that their funds are safe following FDIC insurance coverage being moved over successfully under another bank known as Capital One Financial Corp., but it is still uncertain what will come next for Signature Bank itself now that its services have been put on hold indefinitely due to these criminal investigations taking place behind closed doors until further notice.