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The Federal Deposit Insurance Corporation (FDIC) has asked Cross River Bank, known for its services with fintech and cryptocurrency firms such as Visa and Coinbase, to “self-correct” and “properly repair” shortcomings in its lending activities.
On April 28, the FDIC released a consent order signed with Cross River Bank on March 8 alleging that the bank had engaged in “unsafe” or “unreliable” banking practices related to compliance with applicable fair lending laws and regulations in 2021.
Despite issuing a consent order, Cross River has not yet acknowledged or refuted the violations found in the 2021 review report. It was observed:
“The FDIC has reviewed this matter and determined, and the Bank does not acknowledge or deny, that it engaged in unsafe or unreliable banking practices related to its compliance with applicable fair lending laws and regulations.”
The order says the bank must take immediate action to “increase” attention to its “internal control system, information systems, credit underwriting practices, and internal audit systems related to consumer protection laws and regulations.”
In addition, the bank is obliged to monitor compliance with fair lending laws and promptly “self-correct” any violations.
Cross River was ordered to “properly address” the deficiencies and deficiencies identified in the 2021 review report and put in place processes to ensure that these deficiencies do not reappear in the future.
The FDIC required Cross River to comply in full with the consent order “on time”.
Just a day before the consent order was released, Cross River CEO Gilles Gade released a statement on April 27 that did not mention the FDIC allegations.
Gades stressed that regulatory scrutiny of banks is being tightened, suggesting that Cross River is taking adequate steps to ensure “transparency and accountability.”
“Cross River is the largest of these banking institutions, and as such, we have regulatory experts who are constantly reviewing certain elements of our business,” Gades said.
“We view our compliance capability as a strategic advantage and are proud to lead our industry by maintaining the highest levels of compliance, transparency and accountability,” he wrote.
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The order was filled by the bank just a few days before Circle, the stablecoin issuer behind USD Coin (USDC), partnered with Cross River for banking services, which was announced on March 13.
Circle was looking for a new partnership after its previous provider, Silicon Valley Bank, collapsed on March 11.