Signature Bank Investigated for Alleged Money Laundering Before Collapse Report Reveals

Last updated on March 16th, 2023 at 02:19 pm

A recent report revealed that Signature Bank, a crypto-friendly financial institution based in New York, was investigated for possible money laundering activities prior to its seizure by regulators. The bank was closed down on March 12, 2023, by US authorities shortly after the collapse of Silicon Valley Bank.

The report stated that the Justice Department investigators in Washington and Manhattan were examining whether the bank took sufficient measures to identify potential money laundering by clients, including conducting thorough screenings of account applicants and monitoring transactions for any indications of illicit behaviour.

According to the report, the US Securities and Exchange Commission (SEC) was also monitoring the bank’s activities, although no details were provided regarding the nature of the SEC’s inquiry.

The investigation into Signature Bank may have concluded without any further action, as neither the bank nor its employees have been accused of any wrongdoing. However, it is unclear when the investigations into Signature Bank influenced the state regulators’ decision to close the bank on Sunday.

Shareholders of Signature Bank filed a class action lawsuit against the firm and former executives on March 14, alleging that the bank management made “financially strong” claims three days before the bank was forcefully shut down.

Meanwhile, the collapse of Silicon Valley Bank prompted the Federal Reserve to launch an investigation into its causes on March 13, 2023. The inquiry will focus on evaluating the regulatory and oversight methods employed by the failed financial institution. The inquiry will be led by Federal Reserve Vice Chair for Supervision, Michael Barr, and its findings are expected to be released to the public on May 1, 2023.

While speaking on the issue, Barr emphasized the need for a thorough evaluation of the oversight and regulation of the firm as well as a humble approach to the problem.

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