Signature Bank Was Criminally Investigated Before Collapse: Report

U.S. regulators were looking into the bank to see if it checked transactions with clients as part of its efforts to stop money laundering.

People who know about the situation told Bloomberg on Wednesday that the U.S. government was looking into the anti-money laundering practices of the crypto-friendly Signature Bank before it suddenly shut down over the weekend.

The report says that people from the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) in Washington and Manhattan looked over the bank’s records.

Before Collapse, Signature Bank Was Investigated

Prosecutors from the DOJ were looking into whether or not the company did enough to stop money laundering by checking out account holders and keeping track of transactions.

When the company shut down, the inquiries were not made public. But when talking to Bloomberg, a spokesperson for the SEC brought up something Chair Gary Gensler said on Sunday, when the bank was being closed down.

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

It’s still not clear when the investigation started or if it led to the bank being closed by the government, since no one at the bank has been accused of doing anything wrong. The regulators also said that they no longer trusted Signature Bank’s management because the company didn’t give them accurate information.

Remember that on Sunday, when the closure was announced, regulators said they had taken steps to stop a possible chain reaction because investors were panicking about Silicon Valley Bank’s (SVB) liquidity problem.

Still, the Federal Reserve Board, the Department of Justice (DOJ), and the Federal Deposit Insurance Corporation (FDIC) gave Americans their word that all Signature Bank depositors would get their money back.

SVB Investigation

At the same time, Signature Bank is not the only bank that has failed and is being criticized by U.S. regulators. The SEC and DOJ are looking into the stock sales made by SVB’s executives before the bank failed.

The investigations are still in their early stages, so there may not be any accusations yet.