US-based Signature Bank faced money laundering probe before collapseReport

By India Today Business DeskNew York-based lender Signature Bank, which was shuttered by US authorities shortly after the collapse of Silicon Valley Bank, was facing a criminal probe before it was seized by regulators.

The bank was being investigated by US prosecutors in association with crypto clients before it was shuttered, reported Bloomberg news citing people familiar with the matter.

Investigators from the US Justice Department in Washington and Manhattan were examining whether the failed bank took necessary steps to detect potential money laundering by its clients, added the report.

It also said that the bank was being scrutinised by the Securities and Exchange Commission (SEC).

The report about the investigation comes days after New York’s financial regulator said its decision to close Signature Bank had “nothing to do with crypto”, but a result of “a significant crisis of confidence in the bank’s leadership” after the collapse of Silicon Valley Bank (SVB).

It has also come to light that almost a quarter of Signature Bank’s deposits came from the cryptocurrency sector as of September last year. However, the bank announced in December last year that it would reduce its crypto-related deposits by $8 billion.

No comment has come on the report from the US Federal Deposit Insurance Corporation, which has taken control of the lender. The SEC, Justice Department and Signature Bank are also yet to give a statement related to the matter.

Signature became the third-largest US banking failure since the 2008 financial crisis, just two days after US regulators took control of startups and tech-focused lender, Silicon Valley Bank. The collapse of the two banks led to a brief meltdown in banking and financial stocks before US authorities rushed to introduce measures to limit the fallout.

Also Read | How Silicon Valley Bank’s collapse ripped through global tech