Signature Bank was under investigation for money laundering before its collapse
Reportedly, cryptocurrency-friendly Signature Bank was under investigation by two government agencies in the United States prior to its collapse.
According to a March 15 Bloomberg report that cited multiple people familiar with the matter, DOJ investigators were examining whether Signature Bank took sufficient measures to detect potential money laundering by its customers.
It was noted that the regulator was particularly concerned about whether the bank was taking monitoring safeguards to monitor transactions closely for “signs of criminality” and to ensure proper account holders.
The SEC also conducted a separate investigation to “take a closer look” at the bank, according to two anonymous sources quoted by Bloomberg. Details regarding the nature of the SEC’s investigation were not reported.
It is unclear when the investigations began and what effect, if any, they had on the recent decision by regulators in New York state to close the bank.
Signature Bank and its employees have been reported not to be accused of wrongdoing and the investigation may be closed without charges or further action by the SEC or DOJ.
The report follows a class-action lawsuit filed on March 14 by Signature Bank shareholders against the bank and its former executives for claiming they are “financially strong,” just three days before it was forcibly shut down.
Barney Frank, a former Signature Bank board member, said on March 13 that regulators wanted to “send a very strong anti-crypto message.”
Frank added that the crypto-friendly bank became the “main face of the event,” because “there was no bankruptcy based on the underlying information.”
Related articles: Gemini says no funds at Signature Bank backing GUSD
Signature Bank, which closed on March 12, was part of a series of bank closures that also included Silvergate Capital and Silicon Valley Bank (SVB).
Reportedly, the Departments of Justice and the SEC have since launched separate investigations into the collapse of Silvergate Capital and SVB.
It has also been reported that regulators will be looking closely at the events that led to the collapse of the bank, by scrutinizing files that revealed the sale of SVB Bank shares by CEO Greg Baker and CFO Daniel Beck two weeks before the collapse of the bank.
The SEC has not officially commented on these matters, but SEC Chairman Gary Gensler said on March 12 that the SEC “will conduct investigations and take enforcement action if violations of federal securities laws are found.”