On October 19, 2023, the Federal Reserve Board (FRB) issued a Cease and Desist Order and imposed a fine of US$14.5 million on Metropolitan Commercial Bank (MCB), based in New York, due to violations related to its issuance of prepaid card accounts.

To read in detail, read here https://www.fcctimes.com/2023/10/19/federal-reserve-fines-metropolitan-commercial-bank-of-new-york-14-5-million-for-violations-in-prepaid-card-account-issuance/

In 2020, Metropolitan opened prepaid card accounts for illicit actors who used them to collect illegally obtained state unemployment benefits. The bank failed to verify the identities of account applicants, resulting in violations of the Bank Secrecy Act’s customer identification rules.

Furthermore, MCB failed to verify the true identity of account applicants and did not maintain an adequate third-party risk management program. Even after terminating its relationship with the third-party program manager, MCB continued to benefit financially from fraudulent accounts.

This Order outlines corrective actions aimed at strengthening board oversight and improving compliance with anti-money laundering regulations. MCB is also required to submit a plan within 90 days to enhance its customer identification, customer due diligence, and third-party risk management programs.