Metropolitan Bank Holding in New York will pay $30 million in penalties to address claims it had deficient third-party risk management practices and violated customer identification rules of the Bank Secrecy Act.
The Federal Reserve and New York Department of Financial Services each hit the $6.3 billion-asset bank with $15 million penalties.
The regulators had alleged that Metropolitan, in 2020, opened prepaid card accounts for “illicit actors” who then used the accounts to collect illegally obtained state unemployment insurance benefits.
The Fed said it is also requiring Metropolitan to improve its customer identification, customer due diligence and third-party risk management programs.
Metropolitan had previously disclosed that the bank regulators were looking into its relationship with a former fintech client. The bank reserved $35 million a year ago in hopes of resolving the issue.
The bank noted in a new press release that it ended the relationship with the third party in August 2020 and was able to freeze and return about $100 million in fraudulent payments.