The Federal Reserve joined state regulators in issuing enforcement orders against two community banks on Wednesday.
The central bank fined Billings, Montana-based First Interstate Bank $70,000 for repeated violations of the National Flood Insurance Act. It also joined the Texas Department of Banking to issue a cease-and-desist order against Dallas-based United Texas Bank over money-laundering concerns.
Neither order detailed the specific infractions of the bank in question, as is customary for public enforcement actions.
The order against First Interstate noted that the bank could be fined up to $2,000 per violation of the law, which requires properties in designated flood zones to have flood insurance and calls on banks to ensure the properties they lend against are properly protected.
First Interstate must submit its payment directly to the National Flood Insurance Program.
United Texas was cited for deficiencies related to Bank Secrecy Act and anti-money laundering requirements related to its correspondent banking and virtual currency businesses.
As a result of the order, the $1 billion-asset bank has agreed to revamp its anti-money laundering compliance oversight, its customer due diligence practices, and its suspicious activity monitoring and reporting. United Texas Bank's board of directors will also have to improve their oversight.
The bank must submit a report detailing its compliance with sanctions policies set out by the Treasury Department's Office of Foreign Asset Control, or OFAC.
On its website, United Texas promotes its correspondent banking platform as providing "frictionless" banking to foreign customers looking to access the U.S. market and customers. Services include domestic payments processing through the Fed's automated clearinghouse, or ACH, international wires through the Society for Worldwide International Financial Telecommunication, or SWIFT, and instant settlements through the big bank-owned Real Time Payments network.
The bank has two months to submit plans for remedying its shortcomings to its supervisors. It will then have to issue progress reports at regular intervals.
