The Federal Reserve has issued a cease-and-desist order to United Texas Bank on September 4, citing serious flaws in the bank's risk management system with respect to its crypto client business. The decision is based on a review conducted in May this year that revealed problems with the bank's corporate governance structure, board and senior management oversight, foreign correspondent banking operations, and virtual currency Client Server. The Fed specifically highlighted the bank's "material deficiencies" with respect to anti-money laundering (AML) measures and Bank Secrecy Act (BSA) compliance. In response, United Texas Bank's board of directors has agreed to submit a plan to strengthen BSA/AML compliance oversight. The bank's latest quarterly report shows it has 75 employees and manages assets of about $1 billion. Niko Demchuk, legal head of crypto compliance firm AMLBot, told Decrypt that the impact of such cease-and-desist orders goes far beyond the recipient and its customers. "Each cease-and-desist order plays an important role in the market," he noted. "Other banks will work to gain more insight into what specific aspects are not compliant with current AML regulations in order to improve their own internal AML processes." Demchuk added that the mention of crypto assets will serve as a warning to other banks dealing with crypto assets to review their risk management systems to ensure that all risks are considered and mitigated. (decrypt)