Signature Bank Investigated for Money Laundering Prior to Demise: Report

The cryptocurrency-friendly Signature Bank was reportedly under investigation by two US government agencies before it collapsed.

According to a March 15 Bloomberg report citing people familiar with the case, Justice Department investigators were investigating whether Signature had taken adequate steps to detect potential money laundering by its clients.

It was noted that the regulator was particularly concerned about whether the bank was taking preventive measures to monitor transactions for “signs of crime” and properly vet account holders.

A separate investigation by the Securities and Exchange Commission was also “taking a look” at the bank, according to two anonymous sources cited by Bloomberg. Details about the nature of the SEC’s investigation were not disclosed.

It’s unclear when the investigations began and what effect, if any, they had on New York State regulators’ recent decision to close the bank.

It is reported that Signature and its staff have not been charged with wrongdoing and the investigations can be completed without any charges or further action by the SEC or the Department of Justice (DOJ).

The report comes on the heels of a March 14 class action lawsuit by Signature shareholders filed against the bank and former executives for claiming to be “financially strong” just three days before it was forcibly closed.

Barney Frank, a former board member of Signature Bank, said on March 13 that regulators wanted to “send a very strong anti-crypto message.”

Frank added that the crypto-friendly bank became the “poster boy” because there was “no insolvency based on the fundamentals.”

Related: Gemini says no money at Signature Bank to support GUSD

Signature, which closed on March 12, was part of a series of bank closures that also involved Silvergate Capital and Silicon Valley Bank (SVB).

The DOJ and SEC have reportedly since launched separate investigations into the collapse of Silvergate Capital and SVB.

It is reported that regulators will investigate the events leading up to the bank’s collapse, including investigating security filings proving the sale of SVB stock by the company’s CEO Greg Becker and CFO Daniel Beck two weeks prior to downfall occurred.

The SEC has not formally commented on the matters, but SEC Chairman Gary Gensler said on March 12 that it “will investigate and take enforcement action if we find violations of federal securities laws.”






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