Crypto bank violated anti-money-laundering rules, OCC says

The Office of the Comptroller of the Currency has issued an enforcement action against Anchorage Digital Bank for inadequate anti-money-laundering controls.

Anchorage, based in Sioux Falls, South Dakota, became the first cryptocurrency company to receive a national bank charter in January 2021. It largely operates as a crypto custody provider and raised $350 million in a Series D funding round a little over three months ago.

“The OCC holds all nationally chartered banks to the same high standards, whether they engage in traditional or novel activities,” acting Comptroller Michael Hsu said in a statement Thursday. “When institutions fall short, we will take action and hold them accountable to ensure compliance with federal laws and regulations.”

The OCC said in its consent order that Anchorage didn’t implement a compliance program that “adequately” covered anti-money-laundering and Bank Secrecy Act requirements.

Anchorage neither admits nor denies the OCC’s findings, according to the consent order.

“The findings that were recently shared by the OCC reflect areas for improvement that were identified by the OCC in 2021 in its supervisory capacity,” Anchorage said in a statement. “As the OCC acknowledged in the consent order, we have already been working to strengthen the areas identified and will continue to bolster these areas, reinforcing a new, digital-asset standard for internal BSA/AML controls and procedures.”

Andrew Harrer/Bloomberg

In its statement, the company added that it’s “proud to be the first digital-asset custody bank to be held to the same standards as traditional federally chartered banks.”

The OCC said that Anchorage fell short on “internal controls for customer due diligence and procedures for monitoring suspicious activity, BSA officer and staff, and training.”

According to the consent order, the bank will have to create a committee of at least three members within 15 days to oversee compliance with the consent order. The majority of those members can’t be employed by Anchorage or its affiliates.

Anchorage will also have to employ a BSA officer “vested with sufficient independence, authority and resources to fulfill the duties and responsibilities of the position.”

The committee and the BSA officer will help make sure that Anchorage revises its system for updating customer information and develops an acceptable suspicious activity monitoring and reporting program.

The consent order also requires Anchorage to employ a third party to identify any previously unreported suspicious activity, and institute a BSA/AML audit program that will continue annually.