• Sat. May 21st, 2022

OCC: Anchorage Digital, the flagship digital currency bank, failed to meet its anti-money laundering requirements

ByHazel R. Lang

Apr 26, 2022

The US federal banking watchdog has issued a consent order against the country’s flagship digital currency bank, saying it failed in its anti-money laundering responsibilities.

The Office of the Comptroller of the Currency (OCC) asserted that Anchorage Digital Bank has not adopted and implemented a compliance program that “adequately covers the required elements of the Bank Secrecy Act/anti-money laundering program ( BSA/AML)”. In its consent order, the OCC disclosed that it intended to initiate cease-and-desist proceedings against the company for engaging in violations of laws and regulations.

Anchorage Digital received conditional approval of a National Trust Charter from the OCC in January 2021, making it the first entity to start in the digital asset space to obtain a banking license. The OCC claimed at the time that it had applied the same rigorous scrutiny and standards applied to mainstream players before issuing the charter.

But as the OCC now reveals, Anchorage Digital hasn’t kept up its end of the bargain.

“As of 2021, the Bank has not adopted and implemented a compliance program that adequately covers the required elements of the BSA/AML program, including, in particular, internal controls for due diligence on customer and suspicious activity monitoring procedures, BSA agent and staff, and training,” said the OCC, which is the oldest banking regulator in the United States.

Michael Hsu, the acting Comptroller of the Currency, doubled down on his agency’s commitment to hold all banks nationwide, whether they deal in traditional or digital assets, to the same rigorous positions.

“The OCC holds all nationally chartered banks to the same high standards, whether they engage in traditional or new businesses. When institutions fail, we will take action and hold them accountable to ensure compliance with federal laws and regulations,” he commented.

The OCC ordered the company to appoint a compliance committee of at least three members, with a majority of directors who are not on the company’s payroll. This committee will ensure that the bank complies with AML and BSA requirements and publish progress reports. Anchorage must also appoint an agent for the sole purpose of ensuring that it meets BSA requirements.

US regulators are pretty tough on the BSA, and Anchorage isn’t the first digital asset entity to find itself in trouble for flouting this law which came into effect in 1970 specifically to prevent money laundering by the through financial institutions.

As CoinGeek reported, US watchdogs sued the founders of BitMEX for flouting the BSA, with three top executives – Arthur Hayes, Benjamin Delo and Sam Reed – pleading guilty and each paying $10 million in penalties. . They are awaiting sentencing and face five years behind bars for their actions, although sources say they will likely only get a year in prison after reaching deals with prosecutors.

In the case of Anchorage Digital, the company has neither denied nor admitted the OCC’s accusations. The company, however, said it was proud “to be held to the same standards as traditional federally chartered banks.”

“The findings that were recently shared by the OCC reflect the areas of improvement that were identified by the OCC in 2021 in its oversight capacity. As the OCC acknowledged in the Consent Order, we have already worked to strengthen the identified areas and will continue to strengthen these areas, reinforcing a new Digital Asset Standard for BSA/AML internal controls and procedures.” , the statement said.

Anchorage further claimed that the OCC’s action would give other digital asset companies the confidence to pursue bank charters.

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