The Bank Slate


Thread Bank is latest BaaS provider to receive enforcement action

Thread Bank in Rogersville, Tenn., has been dealt an enforcement by the Federal Deposit Insurance Corp.

The $723 million-asset bank’s consent order instructs management and the board to address concerns over compliance with the Bank Secrecy Act and anti-money laundering laws, third-party risk management, and liquidity management, among other things.

Thread, which is a Banking-as-a-Service (BaaS) provider, was also ordered to document is policies and procedures and have exit plans in place for its fintech partners.

The FDIC also requiring an update to Thread’s strategic plan and a profit plan with goals and strategies for improving the bank’s earnings. The bank must have a plan for having back-up credit lines to address any unexpected liquidity needs.

The board must review and approve risk tolerance thresholds for the bank’s fintech partners and designate a qualified individual to coordinate and monitor daily compliance with the AML and related laws.

Thread dealt with a regulatory order in 2015 when it was still known as Civis Bank. A group that included Patriot Financial Partners and Hermann Companies recapitalized Volunteer Bancorp, the parent company, in 2021, and the order was soon lifted.

Regulators have been aggressively handing enforcement actions to BaaS providers in recent months, including Thread, Blue Ridge Bank, Choice Bank and Piermont Bank.


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