The Federal Reserve and New York Department of Financial Services have imposed a hefty fine on Metropolitan Commercial Bank (MCB) for breaching the Bank Secrecy Act. MCB will pay a total of $29.5 million in penalties for allowing criminals to open new accounts and misdirecting $300 million.
The fine comes as a result of MCB's failure to implement an adequate verification process for its MovoCash digital prepaid visa card program. This allowed bad actors to obtain the cards using fraudulent identification and use the accounts to redirect millions in direct deposit payroll payments and government benefits.
The Federal Reserve is now requiring MCB to enhance its customer identification, customer due diligence, and third-party risk management programs to prevent future fraud. MCB, with $6.683 billion in total assets and seven branches across New York, must take immediate action to rectify the situation.
This case highlights the importance of robust verification processes and diligent oversight in the financial industry. It serves as a reminder to all banks to prioritize customer security and prevent illicit activities within their systems.
