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ARTICLE · 03 JULY 2024

Federal Reserve Board Issues Cease And Desist Order Against Banking-As-A-Service Provider

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On June 14, the Federal Reserve Board (Fed) released a cease and desist order against an Arkansas-based banking-as-a-service (BaaS) provider for compliance and risk management failures. As part of the order...

United StatesTechnology
A.J. Dhaliwal
A.J. Dhaliwal
Mehul Madia
Mehul Madia
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On June 14, the Federal Reserve Board (Fed) released a cease and desist order against an Arkansas-based banking-as-a-service (BaaS) provider for compliance and risk management failures. As part of the order, the bank is prohibited, without prior approval, from (i) establishing any new fintech partners, subsidiaries, business lines, products, programs, services, or program managers, or (ii) offer new products, programs, or services to an existing fintech partner, program manager, or subsidiary.

According to the Fed, its examination found risk management deficiencies with the bank back in August 2023, and a subsequent review in January 2024 revealed further non-compliance with anti-money laundering ("AML"), Bank Secrecy Act ("BSA"), and Office of Foreign Asset Control ("OFAC") requirements. The Fed also revealed deficiencies in the bank's management of consumer compliance risks.

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