Signature Bank was the target of a US criminal probe before it was seized, report says
- Signature faced a US criminal probe over its work with crypto clients before it collapsed, per Bloomberg.
- The DOJ and SEC were investigating whether the bank's anti-money-laundering processes were adequate.
Signature Bank was the target of a US criminal probe over its work with crypto clients before it failed and was seized by regulators, Bloomberg reported.
Department of Justice investigators were looking into whether the New York-based lender was monitoring those clients' activities for signs of possible money laundering, the Tuesday report said, citing people familiar with the matter.
The US markets regulator, the Securities and Exchange Commission, was also examining Signature's processes to detect dirty money, per the report.
Crypto-friendly Signature Bank was shut down Sunday, marking the third-largest bank failure in US history, after Silicon Valley Bank. US regulators are investigating SVB's failure, The Wall Street Journal reported Tuesday.
US investigators are looking into whether Signature adequately carried out checks on the background of people opening accounts and whether it scrutinized transactions for red flags of criminal activity.
Former Rep. Barney Frank, who recently served on Signature's board, has blamed its failure in part on the fallout from last year's rout in cryptocurrencies.
"I think, if it hadn't been for FTX and the extreme nervousness about crypto, that this wouldn't have happened — even to SVB or to us," he told Politico. "And that wasn't something that could have been anticipated by regulators."
Shares in US regional banks cratered Monday in the wake of the failure of Signature and SVB, as investors fretted about the risk they could face the same financial difficulties. But bank stocks have since revived after the Federal Reserve set up a backstop for banks.
On Tuesday, before the Bloomberg report, the New York Department of Financial Services said the regulators' decision to seize Signature was for reasons unrelated to the crypto sector. Crypto firms have been under the spotlight after a string of high-profile collapses, including the implosion of leading exchange FTX.
"The decisions made over the weekend were not crypto related," the spokesperson said. "DFS has been facilitating well-regulated crypto activities for several years, and is a national model for regulating the space."
The DOJ, the SEC and Signature Bank didn't immediately respond to Insider's request for comment on the probe.
The Federal Deposit Insurance Corp., which took control of the lender when it collapsed, declined to comment.
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