An enforcement action announced by the central bank Thursday requires Lineage Financial Network (Lineage FN) of Franklin, Tenn., to serve as a source of strength for its subsidiary Lineage Bank.
Lineage Bank is among the institutions caught up in the bankruptcy of Synapse Financial Technologies, Inc., but the Fed said the enforcement order is unrelated to that proceeding. [Synapse had worked with several insured depository institutions and numerous fintech companies amid reportedly poor or no recordkeeping sufficient to show what funds placed in custodial accounts belonged to whom.]
Among the requirements set for Lineage FN are that it:
- ensure the bank complies with “any other” supervisory action taken by the bank’s federal or state regulator;
- submit a plan to the Federal Reserve Bank of Atlanta (within 30 days) that includes measures to ensure its board maintains an adequate number of directors and committee structure, and an assessment of whether board members have the skills, training, experience and qualifications needed to fulfill their responsibilities; and, among other things,
- take all necessary actions to ensure the bank complies with Sections 23A and 23B of the Federal Reserve Act and the Fed’s own Regulation W in all transactions between the bank and its affiliates, including “but not limited to” Lineage FN.
The Fed also said it has terminated enforcement actions against National Bank of Pakistan, Karachi, Pakistan, and National Bank of Pakistan New York Branch, New York, N.Y. One was an order that the New York branch correct Bank Secrecy Act anti-money laundering program requirements, and the second was issued due to inadequate compliance with the first order.
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