Thread Bank Receives Consent Order with Focus on Fintech Compliance
Thread Bank, a financial institution based in Rogersville, Tennessee, has recently been issued a consent order by the Federal Deposit Insurance Corporation (FDIC). This order comes as a result of unsafe banking practices and IT deficiencies within the bank, prompting the need for comprehensive reforms.
The consent order, effective as of May 21, 2024, outlines several key areas where Thread Bank must take immediate corrective actions. These include enhancing board oversight, updating strategic plans, refining enterprise risk management, and improving policies and procedures to comply with regulatory standards. Additionally, the bank is required to bolster its anti-money laundering (AML) and countering the funding of terrorism (CFT) program to ensure robust compliance with federal laws.
Thread Bank is known for being a popular banking-as-a-service partner bank for over 20 different FinTech partners, including popular apps like Relay, Baselane, and Cleo. The consent order places a significant emphasis on the oversight of their banking-as-a-service and lending-as-a-service offerings.
This regulatory action by the FDIC highlights the increasing scrutiny faced by banks involved in FinTech partnerships. With the recent issues faced by other banks like Evolve Bank, Thread Bank must now prioritize regulatory compliance and oversight of its FinTech partnerships to ensure the safety and security of its customers’ funds.
As Thread Bank works to implement the necessary reforms outlined in the consent order, the financial industry will be closely watching to see how these changes impact the bank’s operations and its relationships with its FinTech partners. Stay tuned for further updates on this developing story.
