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The Federal Reserve announced on Friday that it has mandated Evolve Bancorp Inc. to enhance its risk management programs concerning fintech partnerships and adherence to anti-money laundering regulations.
According to the Fed, a 2023 examination of the Arkansas-based bank revealed insufficient risk management policies. This latest enforcement action, which does not include a financial penalty, is unrelated to the bankruptcy proceedings of Synapse Financial Technologies, Inc., a company that Evolve had partnered with.
A spokesperson for Evolve stated that the order is “similar to orders received by others in the industry” and assured that it does not impact the bank’s current operations, customers, or depositors.
“Evolve remains well-capitalized and continues to show strong growth across all business lines,” the spokesperson added.
Synapse, which acts as an intermediary between banks and fintech companies, filed for bankruptcy in April. This led to the freezing of accounts for customers of its partner banks, including Evolve.
While the exact number of affected account holders remains unclear, regulatory estimates suggest it could be in the tens of thousands. A court-appointed trustee in the bankruptcy case recently reported an $85 million shortfall between what Synapse’s partner banks hold and what depositors are owed.
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