On October 24, 2024, the Federal Reserve Board issued an enforcement action against Washington-based UniBank and its parent company U&I Financial, citing significant deficiencies identified during examinations conducted by the Washington Department of Financial Institutions (WDFI) and the Federal Reserve Bank of San Francisco in February and July. The enforcement action mandates that UniBank's board submit a written plan to enhance oversight and retain an independent third party to assess corporate governance and consumer compliance programs [25d4542f].
This latest action follows a series of regulatory challenges faced by banks in the U.S. that engage with cryptocurrency. Earlier, the Federal Reserve intensified its scrutiny of crypto-friendly banks, issuing a cease and desist order against United Texas Bank (UTB) on September 4, 2023, due to deficiencies in corporate governance and oversight related to foreign correspondent banking and virtual currency customers. UTB had 90 days to submit a compliance improvement plan and 60 days to comply with Treasury regulations [366a5702].
Furthermore, Customers Bank faced regulatory challenges regarding its blockchain-based payment solution, while Custodia Bank, led by CEO Caitlin Long, encountered opposition in its pursuit of a Federal Reserve master account. Eleven Federal Reserve Banks filed briefs against Custodia, emphasizing the perceived risks associated with its crypto activities. Custodia's application for a master account was rejected in January 2023, and the bank is currently appealing this decision [366a5702].
These enforcement actions reflect a broader trend of increased oversight and regulation aimed at ensuring compliance and mitigating risks associated with both traditional banking practices and the burgeoning cryptocurrency sector. As the regulatory landscape continues to evolve, banks like UniBank and others must navigate these complexities to maintain their operations and client relationships [25d4542f][366a5702].