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Accusations of Money Laundering Surface at Signature Bank

2 mins
15 March 2023, 13:15 GMT+0000
Updated by Geraint Price
15 March 2023, 13:15 GMT+0000
In Brief
  • Signature Bank's involvement with crypto clients is being investigated for anti-money laundering.
  • Three crypto-friendly banks, Silvergate bank, Silicon Valley Bank, and Signature Bank were shut down.
  • Are these banks victims of Operation Choke Point?
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U.S. regulators are reportedly investigating the crypto-friendly Signature Bank for money laundering. But is it the latest development in operation Choke Point?

According to a Bloomberg report, U.S. regulators have been investigating Signature Bank’s involvement with crypto clients before the Federal Reserves closed it on Sunday.

The Justice Department was investigating if the bank followed proper anti-money laundering compliance. Whereas the U.S. Securities and Exchange Commission (SEC) was “taking a look” through a confidential inquiry.

There is no clarity if the investigation was the reason for the sudden shutdown of the bank on Sunday.

Target of Operation Choke Point?

After the authorities closed Signature Bank there was a discussion within the community about whether it was a part of the crypto crackdown by the U.S. regulators. Venture Capitalist Nic Carter tweeted, “regulators wanted to kill off the last major pro-crypto bank.”

The bank’s board member and one of the drafters of the Dodd-Frank act, Barney Frank, said regulators shut Signature Bank down to send an anti-crypto message. However, the New York State Financial Services Department said the shutdown of Signature Bank was due to a lack of transparency rather than crypto.

Last week, three crypto-friendly banks, Silvergate, Silicon Valley, and Signature Bank, were shut down.

Carter believes that U.S. regulators have ignited the operation Choke Point 2.0, which is a rogue operation to cut down the banking access of the crypto firms. According to him, the government kick-started the mission on Jan. 3 by warning banks with crypto exposure.

The Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) issued a joint statement to the banks asking them to align with “safe and sound banking practices.” 

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