OCC: Flagship digital currency bank Anchorage Digital failed in its AML requirements

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The U.S. federal banking watchdog has issued a consent order against the flagship digital currency bank in the country, claiming that it failed in its anti-money laundering responsibilities. 

The Office of the Comptroller of the Currency (OCC) claimed that Anchorage Digital Bank had failed to adopt and implement a compliance program that “adequately covers the required Bank Secrecy Act/anti-money laundering (BSA/AML) program elements.” In its consent order, the OCC revealed that it intended to initiate cease-and-desist proceedings against the company for engaging in violations of laws and regulations.

Anchorage Digital obtained conditional approval for a national trust charter from the OCC in January 2021, making it the first entity that started out in the digital asset space to get a banking license. The OCC claimed at the time that it had applied the same rigorous review and standards applied to traditional players before issuing the charter.

But as the OCC now reveals, Anchorage Digital didn’t keep its end of the bargain.

“As of 2021, the Bank failed to adopt and implement a compliance program that adequately covers the required BSA/AML program elements, including, in particular, internal controls for customer due diligence and procedures for monitoring suspicious activity, BSA officer and staff, and training,” the OCC, which is the oldest banking regulator in the U.S. said.

Michael Hsu, the Acting Comptroller of the Currency, doubled down on his agency’s commitment to hold all banks in the country, whether they deal with traditional or digital assets, to the same rigorous stands.

“The OCC holds all nationally chartered banks to the same high standards, whether they engage in traditional or novel activities. When institutions fall short, we will take action and hold them accountable to ensure compliance with federal laws and regulations,” he commented.

OCC ordered the company to appoint a compliance committee of at least three members, of which a majority shall be directors who are not on the company’s payroll. This committee shall ensure the bank complies with AML and BSA requirements and shall issue progress reports. Anchorage must also appoint an officer with the sole purpose of ensuring it adheres to BSA requirements.

U.S. regulators are quite stringent on the BSA, and Anchorage isn’t the first digital asset entity to find itself in trouble over flouting this law which came to effect in 1970 specifically to prevent money laundering through financial institutions.

As CoinGeek has reported, U.S. watchdogs have gone after the founders of BitMEX for flouting the BSA, with three of the top executives—Arthur Hayes, Benjamin Delo, and Sam Reed—pleading guilty and paying $10 million each in penalties. They await sentencing and face five years behind bars for their actions, although sources say they will likely get just a year in prison after cutting deals with prosecutors.

In Anchorage Digital’s case, the company neither denied nor admitted to the OCC’s accusations. The company, however, claimed that it was proud “to be held to the same standards as traditional federally chartered banks.”

“The findings that were recently shared by the OCC reflect areas for improvement that were identified by the OCC in 2021 in its supervisory capacity. As the OCC acknowledged in the consent order, we have already been working to strengthen the areas identified and will continue to bolster these areas, reinforcing a new, digital asset standard for internal BSA/AML controls and procedures,” the statement read.

Anchorage further claimed that the action by the OCC will give other digital asset firms confidence to pursue banking charters.

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