Fintech
Fed penalizes Evolve Bank for failing to manage fintech partnership risk
By Hannah Lang and Pete Schroeder
WASHINGTON (Reuters) – The Federal Reserve said on Friday it had ordered Evolve Bancorp Inc to strengthen its risk management programs related to fintech partnerships and anti-money laundering laws.
The Fed said in a statement that a 2023 review of the Arkansas-based bank found insufficient policies in place.
He added that the new enforcement action, which did not include any fine, was independent of the bankruptcy proceedings involving Synapse Financial Technologies, Inc., with which the bank had partnered.
In a statement, an Evolve spokesperson said the order is “similar to orders received by other industry players” and does not impact existing businesses, customers or depositors.
“Evolve remains well capitalized and continues to show strong growth across all lines of business,” the spokesperson said.
Synapse, an intermediary between banks and fintech companies, filed for bankruptcy in April, leading to the freezing of accounts for its partners’ customers, including Evolve.
It’s not yet clear how many people have had their accounts frozen as a result of Synapse’s failure, but regulators have estimated it could be tens of thousands.
A court-appointed trustee in the bankruptcy case said last week that there is an $85 million shortfall between Synapse’s partner banks and what depositors are entitled to.
(Reporting by Hannah Lang in New York and Pete Schroeder in Washington; Editing by Andrea Ricci)