The Federal Deposit Insurance Corporation entered into a consent order with Piermont Bank, headquartered in New York City, on 26 February 2024, citing unsafe and unsound banking practices related to the institution's banking-as-a-service partnerships with fintech companies. The order compels Piermont to address identified deficiencies in its internal controls, information systems, and anti-money-laundering programme, and requires a series of retrospective reviews of historical transactions within defined supervisory timelines.
The FDIC identified that Piermont's internal controls and information systems were inadequate for the size and scope of its third-party fintech relationships.
TRANSACTION REVIEW AND REMEDIATION REQUIRED
Among the specific requirements imposed by the consent order, Piermont must conduct a review of all transactions processed since September 2022 to identify any that should have generated suspicious activity reports but did not. The bank must also examine all Electronic Funds Transfer disputes dating back to August 2020.
OTHER RECENT BAAS ORDERS
The Piermont action follows other FDIC enforcement actions against banks that provide banking-as-a-service infrastructure to fintech clients. Sutton Bank was the subject of an FDIC consent order on 1 February 2024, and Lineage Bank received a similar order on 29 January 2024, making Piermont the third BaaS-focused institution to face formal federal action within a single month.