The Federal Reserve and the New York Department of Financial Services have imposed a multi-million dollar fine on a U.S. bank for violating the Bank Secrecy Act.
The agencies say Metropolitan Commercial Bank (MCB) will pay a total of $29.5 million in fines for allowing criminals to open new accounts and improperly transfer as much as $300 million.
According to the DFS, the bank issued its MovoCash digital prepaid visa card program to bad actors in 2020 for not using an adequate verification process to determine the true identities of applicants.
The thieves provided fraudulent identification information and used their accounts to misrepresent millions in direct payroll payments and government benefits.
“MCB failed to prevent a massive, ongoing fraud in the MovoCash prepaid card program, allowing bad actors to abuse the financial system…
[MCB] noted a surge in fraudulent MovoCash account openings and after the problem was not resolved, new MovoCash accounts could be opened.
This inaction allowed fraud to increase exponentially in the coming months and caused more than $300 million in pandemic unemployment benefits to be misdirected to fraudsters’ MovoCash accounts.”
The Fed says it is now forcing MCB to improve its customer identification, customer due diligence and third-party risk management programs.
MCB has total assets of $6.683 billion with seven offices in New York.
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