Report: Bank Was at Center of Criminal Probe Before Collapse

Per Bloomberg, the feds were looking into Signature Bank's dealings with crypto clients
By Jenn Gidman,  Newser Staff
Posted Mar 15, 2023 6:35 AM CDT
Report: Bank Was at Center of Criminal Probe Before Collapse
A sign is displayed outside an office building housing a branch of Signature Bank in Beverly Hills, California, on Monday.   (AP Photo/Damian Dovarganes)

On Tuesday, a spokesperson for the New York State Department of Financial Services insisted that the shuttering of Signature Bank, the third US financial institution to collapse in just a matter of days, had "nothing to do with crypto," per Reuters. By Tuesday evening, however, Bloomberg suggested that might not be the case, reporting that federal prosecutors were examining the bank's dealings with cryptocurrency clients even before its demise. Sources say that DOJ investigators in both Manhattan and DC have been looking into how closely Signature paid attention to possible money laundering schemes, including how carefully it vetted individuals opening accounts and kept tabs on eyebrow-raising transactions.

Sources say the Securities and Exchange Commission is also involved in its own probe. Neither Signature Bank nor the FDIC, which is now in control of the bank and seeking a buyer, has yet commented on the Bloomberg report, and it's not clear when the investigation kicked off, or if it held any weight in the NYSDFS' decision to shut the bank down over the weekend. The New York regulators have simply said their confidence in Signature plummeted after the bank didn't provide "reliable and consistent data." The SEC is staying mum as well: On Sunday, Chairman Gary Gensler simply noted that his agency would "investigate and bring enforcement actions if we find violations of the federal securities laws."

Regulators have been sending up the red flag for some time on crypto, warning that the digital currency offers opportunity for illegal activity, and that banks have to take greater care in monitoring crypto transactions. Signature isn't the only bank now shuttered and under the microscope: The DOJ is diving deeper into Silvergate Capital Corporation, which specialized in crypto clients, and its work with the defunct FTX exchange, while federal investigators are also looking into the sale of stock by executives at Silicon Valley Bank in the days before its own collapse—the largest bank failure since the 2008 financial crisis, per Fox News. (More Signature Bank stories.)

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