Reported by Gabrielle Saulsbery

Blue Ridge Bank has found itself in regulatory crosshairs again, leading to a consent order with the Office of the Comptroller of the Currency issued January 24.

Blue Ridge’s primary federal regulator deemed the bank in “troubled condition” after the fintech-focused bank’s alleged continuous failure to establish and maintain a strong and well-staffed Bank Secrecy Act/Anti-Money Laundering compliance program.

The OCC alleged that Blue Ridge’s BSA/AML program experienced systemic internal controls breakdowns and had weak independent testing, and that the bank failed to correct problems already called out within its BSA/AML program by the OCC in a regulatory action in September 2022.

As with the prior regulatory action, Blue Ridge is prohibited from starting up any new third-party fintech relationships or building upon ones already started without the permission of the OCC, and it must maintain a leverage ratio of 10% and a capital ratio of 13% — compared to well-capitalized standards of 5% and 10% — lest it be deemed undercapitalized.

But even with its higher leverage and capital ratio requirements, Blue Ridge cannot be deemed well-capitalized, under the consent order.

Among other things, the bank must also:

• Maintain a committee to monitor compliance with the order and regularly submit progress reports to the regulator
• Submit a written plan to the OCC detailing how it intends to achieve and sustain BSA/AML compliance
• Develop a written program to assess and manage risks posed by third-party relationships
• Develop a better risk-based program to ensure the bank, including accounts related to third party fintechs, meet compliance requirements in filing suspicious activity reports
• Develop a three-year strategic capital plan for achieving and maintaining capital no less than required by the order

Read full report: https://finance.yahoo.com/news/troubled-blue-ridge-bank-enters-111826577.html