Bank agrees to pay $63 million in fines for compliance faults with anti-money laundering laws related to crypto transactions

A La Jolla, Calif., bank and its holding company agreed to pay $63 million in civil money penalties (CMP) for “deficiencies” in monitoring of transactions related to crypto assets in compliance with anti-money laundering (AML) laws, the Federal Reserve said late Monday.

The Federal Reserve said Silvergate Capital Corp. and Silvergate Bank, both of La Jolla, in 2017 launched the Silvergate Exchange Network (SEN), an internal payments platform, the Fed said, that “permitted bank customers participating in the SEN to make and receive, in near real time, internal Bank transfers of U.S. dollars to and from other Bank customers participating in the SEN.”

The agency said the SEN was launched to facilitate U.S. dollar internal bank transfers among Silvergate customers “engaged in buying and selling crytpo assets.”

However, the agency said, a Fed investigation found deficiencies in Silvergate’s monitoring of internal transactions through the SEN. Last year, the Fed along with the California Department of Financial Protection and Innovation (DFPI, the state banking regulator) mutually agreed with Silvergate to a cease-and-desist order that requires Silvergate to self-liquidate.

The $63 million in fines – $43 million by the Fed and $20 million by the DFPI – resulted in the bank’s deficiencies for complying with AML laws, the Fed indicated.

Federal Reserve Board fines Silvergate Capital Corporation and Silvergate Bank $43 million for deficiencies in Silvergate’s monitoring of transactions in compliance with anti-money laundering law

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