Banking regulators cracked down on companies in 2024 for violations related to banking as a service amid a massive breakdown in the sector, historic money-laundering crimes and a litany of practices that harmed consumers.
The industry’s four top watchdogs — the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp. and the Consumer Financial Protection Bureau — dished out more than 120 enforcement actions, fines, lawsuits and complaints against banks of all sizes. The OCC alone took 36 formal enforcement actions against banks, more than triple what it did in 2023.
More than half a dozen banks got dinged in the last year for struggling to manage their third-party relationships, known as banking as a service, or BaaS. The issue was exacerbated in April after the bankruptcy of Synapse, a software firm that connected banks with fintechs, left thousands of people without access to their money. Synapse and four partner banks are still missing between $65 million and $85 million of customer funds.
In 2024, some banks, including Blue Ridge Bank, Five Star Bank and Metropolitan Commercial bank, said they would exit the BaaS business.
Policing for dirty money also got the spotlight in 2024, as TD Bank Group was found to have facilitated the movement of more than $670 million due to major shortfalls in risk management. Other megabanks also got the hammer for similar violations, on far smaller scales, which some experts pointed to as a renaissance of the compliance issue from a spate of enforcement actions following the financial crisis of 2007.
The CFPB also zeroed in on failings with card services. The bureau
Here’s a list of some of the most significant enforcement actions of 2024.