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Billion-Dollar Bank Pays $29,500,000 Fine for ‘Massive Fraud’, Allowing Criminals to Access $300,000,000

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The Federal Reserve and New York Department of Financial Services are hitting a US bank with a multi-million dollar fine for violating the Bank Secrecy Act.

The agencies say Metropolitan Commercial Bank (MCB) will pay a total of $29.5 million in penalties for allowing criminals to open new accounts and misdirect a staggering $300 million.

According to the DFS, the bank issued its MovoCash digital prepaid visa card program to bad actors in 2020 because it did not use an adequate verification process to uncover the true identity of the applicants.

The thieves gave fraudulent identification and used their accounts to misdirect millions in direct deposit payroll payments and government benefits.

“MCB failed to prevent a massive, ongoing fraud in the MovoCash prepaid card program, allowing bad actors to abuse the financial system…

[MCB] observed a surge of fraudulent MovoCash account openings, and after failing to remedy the problem, allowed new MovoCash accounts to be opened.

This inaction allowed the fraud to increase exponentially over the next few months and facilitated more than $300 million in pandemic unemployment benefits to be misdirected to the MovoCash accounts of fraud actors.”

The Fed says it’s now forcing MCB to improve its customer identification, customer due diligence, and third-party risk management programs.

MCB has $6.683 billion in total assets with seven branches across New York.

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