US Authorities Probing Signature Bank for Preemptive Measures Against Money Laundering

According to sources familiar with the matter, the cryptocurrency-friendly Signature Bank was reportedly under investigation by two US government bodies prior to its closure.

The Justice Department was looking into whether the bank had taken sufficient measures to detect any possible money laundering activity by its clients.

The regulator was particularly concerned about whether the bank had been proactive in monitoring transactions for any signs of criminal activity and whether it had properly verified the identities of account holders.

Additionally, the Securities and Exchange Commission was conducting a separate investigation into the bank. However, details of the SEC’s investigation were not revealed.

It is unclear when the investigations began and whether they played a role in the recent decision by New York state regulators to shut down the bank.

It should be noted that Signature Bank and its staff have not been accused of any wrongdoing, and the investigations may conclude without any charges or further action by the DOJ or SEC.

A recent class-action lawsuit was filed against the bank and its former executives by shareholders for falsely claiming to be “financially strong” just three days before it was closed down.

According to Cointelegraph, on March 13, Barney Frank, a former board member of Signature Bank, claimed that regulators had intended to convey an “anti-crypto message” and had used Signature as a “poster boy.”

Frank contended that the bank’s collapse was not based on fundamental insolvency.

In addition to Signature Bank, Silvergate Capital and Silicon Valley Bank (SVB) also experienced closures. The US Department of Justice and the Securities and Exchange Commission are reportedly investigating the collapses of these banks.

Regulators will scrutinize the events leading up to the collapse of Signature Bank, including looking at security filings that disclosed the sale of SVB shares by the CEO and CFO two weeks before its downfall.

SEC Chair Gary Gensler noted on March 12 that the SEC would investigate and take enforcement action if it discovered violations of federal securities laws, but the SEC has not made any official statements about these matters.