The US Federal Reserve Board has penalised Evolve Bancorp and its subsidiary, Evolve Bank & Trust, for multiple “deficiencies” in the bank’s risk management, anti-money laundering (AML) and compliance practices.
The Memphis-headquartered bank operates an open banking division (OBD) alongside a suite of traditional banking services, through which it provides deposit accounts and payment processing services to fintechs.
According to the Federal Reserve’s order, examinations conducted in 2023 found that the bank had “engaged in unsafe and unsound banking practices by failing to have in place an effective risk management framework for those partnerships”.
The Federal Reserve has mandated that until Evolve improves its risk management policies and programmes to comply with AML laws and consumer protection regulations, it must halt certain activities.