Federal Reserve Orders Evolve Bancorp to Enhance Risk Management

On June 14th, 2024, The Federal Reserve mandated Evolve Bancorp Inc. to strengthen its risk management programs concerning fintech partnerships and increase compliance with anti-money laundering laws. This directive follows a 2023 examination that revealed inadequate policies at the Arkansas-based bank. Notably, this enforcement action is separate from the bankruptcy proceedings of Synapse Financial Technologies, Inc., a fintech firm previously partnered with Evolve. Although the order does not include a financial penalty, it underscores the necessity for improved regulatory adherence within Evolve's operations.

Despite the regulatory intervention, Evolve Bancorp assures stakeholders of its stability and continued growth across various business lines. The bank remains well-capitalized and emphasizes that the order will not impact its current customers or depositors. The bankruptcy of Synapse, which disrupted numerous customer accounts, has revealed an $85 million discrepancy between Synapse’s partner banks and depositor liabilities. This situation has potentially affected tens of thousands of account holders, as estimated by regulators. A court-appointed trustee is currently managing the bankruptcy case to address this significant shortfall.

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