The Federal Reserve Board on Thursday issued an enforcement action and fined Metropolitan Commercial Bank, of New York, New York, approximately $14.5 million for violations of customer identification rules and for deficient third-party risk management practices relating to the bank’s issuance of prepaid card accounts.
In 2020, Metropolitan opened prepaid card accounts for illicit actors who subsequently used the accounts to collect illegally-obtained state unemployment insurance benefits. By opening prepaid card accounts through a third-party program manager without having adequate procedures for verifying each applicant’s true identity, Metropolitan violated customer identification rules of the Bank Secrecy Act. The Board is requiring Metropolitan to improve its customer identification, customer due diligence, and third-party risk management programs.
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. The penalties announced by the Board and the Department of Financial Services total approximately $30 million.
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