OCC demands Blue Ridge Bank to make improvements to checking of fintech partners

Blue Ridge Lender in Charlottesville, Virginia, has agreed to bolster its anti-income-laundering system and enhance its oversight of fintech companions in response to issues from federal regulators.

An agreement with the Business of the Comptroller of the Currency, whose considerations helped scuttle a earlier prepared merger, would demand Blue Ridge to make many advancements to “control the hazards posed by” its fintech partnerships, the financial institution claimed Thursday in a securities filing. 

The settlement, which took influence Monday, needs the bank to get a nonobjection from the OCC right before it indicators any contracts with new fintech associates or provides new goods with its present associates. 

The lender claimed in the filing that it “proceeds to cooperate with the OCC, and to do the job to deliver the Bank’s fintech insurance policies, techniques and functions into conformity with OCC directives.”

“The Bank’s board of administrators and administration are dedicated to totally addressing the provisions of the Agreement in the necessary timeframes, and think the Lender has produced development in addressing the needs to date,” the bank said.

Blue Ridge CEO Brian Plum declined to comment further. An OCC spokesperson also declined to remark, expressing the company does not remark on distinct banks or enforcement steps.

The bank’s securities filing did not element the OCC’s precise problems, but Blue Ridge has faced scrutiny from customer advocates about an money-share settlement solution that it has offered to students. Critics say the products could direct to abuses.

Beneath the earnings share agreements, which the bank has financed with the fintech MentorWorks, students get funding that they agree to repay with a portion of their potential earnings.

Past yr, Blue Ridge Bank’s dad or mum enterprise stated that the OCC had raised “certain regulatory considerations” that were delaying its merger with a different Virginia bank, FVCBankcorp. The two banking institutions referred to as off the offer in January.

Numerous components of the OCC enforcement motion revolve close to advancements to how Blue Ridge complies with the Lender Secrecy Act. The settlement needs the financial institution to “adopt, employ and adhere to an efficient published” Financial institution Secrecy Act danger method that also addresses any routines that its fintech partners conduct, according to the securities submitting.

The financial institution also should build a new Lender Secrecy Act audit system with an “expanded scope” that covers its fintech companions, and it ought to ensure that its Financial institution Secrecy Act office is “correctly staffed with personnel that have requisite experience, schooling, expertise and authority,” according to its filing.

Bank officers claimed they agreed to submit an “motion prepare” to the OCC, explaining how Blue Ridge will strengthen its checking of suspicious exercise, such as “high danger consumer action involving the Bank’s third-party fintech associates.”

The regulatory arrangement did not say whether Blue Ridge would encounter any monetary penalties.