Signature Bank was probed by feds for money laundering before collapse: report

Federal investigators were looking into whether Signature Bank was vigilant enough in cracking down on money laundering by its clients just before the failed New York-based lender was thrown into receivership, according to a report.

Justice Department officials in New York and Washington, DC, were investigating Signature for allegedly being lax in flagging suspicious financial transactions, Bloomberg News reported.

When reached by The Post, a spokesperson for Signature Bridge Bank declined to comment.

Signature Bridge Bank is the newly created, federally run entity that is handling Signature accounts following the lender’s takeover on Sunday by the Federal Deposit Insurance Corp.

Officials at the Justice Department, the US Attorney’s Office, and the Securities and Exchange Commission were not immediately available for comment.

SEC Chair Gary Gensler released a statement Sunday vowing to “investigate and bring enforcement actions if we find violations of the federal securities laws.”

Signature has not been accused of wrongdoing. It is also unclear when the investigation was opened and whether it played a role in the decision by New York state regulators and the FDIC to shut it down.

Signature Bank was being investigated by the feds before it was shut down on Sunday, according to a report.
AP Photo/Seth Wenig

Signature Bank of New York's collapse is the third largest bank failure in US history.
Signature Bank of New York’s collapse is the third-largest bank failure in US history.
AFP via Getty Images

As of the start of the year, Signature had $110.36 billion in assets under management as well as total deposits of some $88.59 billion, according to New York state’s Department of Financial Services.

Signature’s failure stems from its significant lending in the cryptocurrency sector.

The bank was one of a handful of financial institutions that allowed depositors to hold digital assets in their accounts.

Signature was being probed for allegedly being too lax in flagging suspicious financial transactions.
Signature was being probed for allegedly being too lax in flagging suspicious financial transactions.
Bloomberg via Getty Images

Speculative assets such as cryptocurrency have been retreating for months. Confidence in the digital assets has been sagging since the collapse of FTX, the cryptocurrency exchange founded by accused fraudster Sam Bankman-Fried.

Barney Frank, the former Massachusetts Democratic congressman who sits on the board of Signature, told the Wall Street Journal that the bank’s downfall should be blamed on the collapse of Silicon Valley Bank.

Follow The Post’s coverage of Silicon Valley Bank’s collapse

“It was an SVB-generated panic,” Frank said. “We were fine until the last couple of hours on Friday.”

Frank, who as a legislator touted strict regulations of financial institutions, changed his tune after he was named to the board of Signature.

The Securities and Exchange Commission declined to comment.
The Securities and Exchange Commission declined to comment.

SVB was also placed into FDIC receivership after depositors staged a run on the bank last week.

The tech-centric lender rang alarms when it sought to raise $2.25 billion after reporting an after-tax loss of $1.8 billion in various bets on securities.

Silicon and Signature depositors will be made whole, but the banks’ shareholders and unsecured debtors will not be protected, officials said.