US Federal Reserve Board slaps $14.5m fine on Metropolitan Commercial Bank
The US Federal Reserve Board has issued an enforcement action and fined New York’s Metropolitan Commercial Bank $14.5 million.
The Federal Reserve Board slaps $14.5m fine on Metropolitan Commercial Bank
The Board alleges that the bank violated customer identification rules and has identified “deficiencies” in the bank’s third-party risk management with respect to its issuance of prepaid card accounts.
From April to July 2020, the Board says that the bank “received multiple reports indicating widespread fraud” relating to its prepaid card programme, but continued to issue such accounts to applicants whose true identity could not be adequately verified.
“Although MCB took steps to identify and block or close fraudulent accounts during this period, those steps were ineffective,” the Board alleges.
It adds that these “illicit actors” collected more than $300 million in “illegally obtained” state unemployment benefits – of which, approximately $200 million has not been recovered.
The Board clarifies that the bank has taken steps to “remedy the deficiencies identified” and will be required to enhance its customer identification, customer due diligence and third-party risk assessment programmes.
“The Board’s action is being taken in conjunction with an action by the New York Department of Financial Services, the state supervisor of Metropolitan,” it says in a statement. “The penalties announced by the Board and the Department of Financial Services total approximately $30 million.”
