Reported by Tom Schoenberg

US prosecutors were investigating Signature Bank’s work with crypto clients before regulators suddenly seized the lender this past weekend, according to people familiar with the matter.

Justice Department investigators in Washington and Manhattan were examining whether the New York bank took sufficient steps to detect potential money laundering by clients — such as scrutinizing people opening accounts and monitoring transactions for signs of criminality, the people said. The Securities and Exchange Commission also was taking a look, two people said, asking not to be named because the inquiries are confidential.

The Federal Deposit Insurance Corp., which took control of the firm, declined to comment. A representative for the entity that was set up by the government after the seizure also declined to comment. 

Representatives for the Justice Department, US Attorney’s Office in Manhattan and SEC declined to comment. But a spokesperson for the agency, which brings only civil cases, pointed to a statement from Chair Gary Gensler on Sunday, when authorities took steps to bolster US lenders and shut Signature.

“We will investigate and bring enforcement actions if we find violations of the federal securities laws,” the SEC chief said at the time.

The bank and its staff haven’t been accused of wrongdoing, and the investigation could end without further action. It’s unclear when the probes involving Signature Bank were opened and whether it had any effect on the decision by state regulators to close the bank on Sunday. States regulators have said they lost faith in management after the bank failed to provide “reliable and consistent

Read full report: https://www.bloomberg.com/news/articles/2023-03-15/signature-bank-faced-criminal-probe-ahead-of-firm-s-collapse?leadSource=uverify%20wall