Bloomberg reported that the United States Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) investigated Signature Bank for money laundering before its demise last week.
According to the report, the prosecutors probed the bank’s business operations, with companies offering crypto services, to determine whether the bank violated federal laws.
Authorities Probe Signature Bank for Money Laundering
Justice Department investigators in Washington DC and Manhattan districts looked into the now-defunct financial company to uncover whether Signature Bank implemented adequate security measures to detect potential money laundering activities executed by its customers.
On the other hand, the SEC probed the bank for possible violations of securities laws and to ensure that the financial firm installed adequate security steps to monitor its client transactions and account openings to avoid aiding criminal activities.
During a speech regarding the bank’s closure, SEC chair Gary Gansler said Sunday that the agency would bring an enforcement action against Signature Bank if it finds that it violated American security laws.
Signature Bank Executives Sued for Fraud
According to the Blomberg report, the New York-based bank, alongside its executives, has not been accused of any wrongdoing. The media house believes that investigations into the firm in which the outcome is still unknown could end without further legal action.
The report also pointed out that the investigation could have influenced the regulator’s decision to shut down the bank on Sunday after two major banks in the country failed.
While the bank and its executives have not been found guilty of any crimes, stakeholders of the company collectively sued Signature Bank and its former senior executives for fraud.
In a court document filed in the United States District Court for the Eastern District of New York, the class action suit alleged that the bank and three of its former employees, Joseph Depaolo, Stephen Wyremski, and Eric Howell, claimed that the company had a strong balance sheet a few days after its collapse.
The plaintiffs claimed that the statements were false and misleading because the bank did not have a strong foundation as it presented to customers.
