The prestigious Metropolitan Commercial Bank, caught up in a fraud scandal, has been sanctioned by the Fed and fined $29.5 million.

Metropolitan Commercial Bank fined $15M by the Fed

Crypto companies are often flagged by the authorities and traditional banks, who see them as facilitators of illegal activities. However, recent events related to Metropolitan Commercial Bank, a major U.S. bank, show that this is not just the case for cryptos.

The Metropolitan Commercial Bank (MCB) is forced to pay a fine of $15 million imposed jointly by the Federal Reserve and the New York Department of Financial Services. This sanction stems from allegations that the bank had breached the law on banking confidentiality and led to a massive fraud in which criminals embezzled massive sums of money.

According to regulators, the bank has not put in place a robust system to combat money laundering and conducted its banking operations in a risky and inappropriate manner. The MCB allegedly let these criminals open several accounts and abuse the prepaid digital visa card service MovoCash in January 2020.

The failure in the verification process led to a loss of 300 million euros.

MCB failed in its process of verifying account identities, allowing fraudsters to use false information to create accounts MovoCash. They then used these accounts to steal money, including government salaries and grants.

The situation worsened in March 2020 when new legislation granted unemployment benefits to many Americans, as reported in the New York Department of Financial Services. Taking advantage of this opportunity, the crooks embezzled more than $300 million, including funds intended to support the population during the pandemic, using MovoCash.

Faced with this situation, the Federal Reserve and the New York Department of Financial Services have taken tough action against MCB.

The bank is now forced to perfect its identification methods and to intensify the risk management.

This scandal is not an isolated one: a report by Chainalysis shows that criminals often target the traditional banking sector. Furthermore, the Irish GNECB reports that bank-related scams dominate online fraud this year.