The Federal Reserve Board announced on Friday that it has ordered Evolve Bancorp Inc to enhance its risk management procedures in cooperation with financial technology and anti-money laundering laws.
The Fed stated in its announcement that an inspection of the Arkansas-based bank in 2023 revealed inadequacies in its policies.
Additionally, this new enforcement action comes without fines and is unrelated to the bankruptcy proceedings of Synapse Financial Technologies, Inc., which collaborates with the bank.
A spokesperson for Evolve stated that the order is similar to those received by other companies in the industry and will not affect its existing operations, clients, or depositors.
"Evolve remains well-capitalized, and all lines of business are demonstrating robust growth," the spokesperson said.
Synapse, acting as an intermediary between banks and fintech companies, filed for bankruptcy in April, which led to the freezing of partner client accounts, including those of Evolve.
It remains unclear how many accounts were frozen due to Synapse's bankruptcy, but regulators estimate it could affect tens of thousands.
A court-appointed trustee in the bankruptcy case stated last week that there is an $85 million shortfall between what Synapse's partner banks owe depositors.
