NEW YORK—The failed Signature Bank was being investigated for money laundering by U.S. prosecutors in Washington and Manhattan before being shut down on March 12, according to a new report.
Separately, a buyer has been found for portions of the bank.
The bank was being investigated for whether it took the appropriate actions to prevent possible money laundering by its clients, Techstory reported.
The bank was also under the lens of the Securities and Exchange Commission in a separate investigation.
Justice Department officials were looking into whether Signature Bank took the necessary precautions to thwart suspected money laundering by its clientele as it investigated them, according to Techstory. The regulators were said to be especially concerned about whether the bank was taking preventative steps to scrutinize transactions for “signs of wrongdoing” and thoroughly screening account holders, the report added.
Signature Bank was heavily involved in the crypto space prior to its failure.
Buyer is Found
Separately, the Federal Deposit Insurance Corporation (FDIC) said it has entered into a purchase and assumption agreement for substantially all deposits and certain loan portfolios of Signature Bridge Bank by Flagstar Bank, Hicksville, N.Y., a wholly owned subsidiary of New York Community Bancorp, Inc., Westbury, New York.
According to the FDIC, the 40 former branches of Signature Bank will now operate under New York Community Bancorp's Flagstar Bank and will open during their normal business hours. Customers of Signature Bridge Bank, N.A., should continue to use their current branch until they receive notice from the assuming institution that full-service banking is available at branches of Flagstar Bank, the FDIC said.
Depositors of Signature Bridge Bank, N.A., other than depositors related to the digital banking business, will automatically become depositors of the assuming institution.
What’s Not Included
The FDIC said Flagstar Bank's bid did not include approximately $4 billion of deposits related to the former Signature Bank's digital banking business. The FDIC will provide these deposits directly to customers whose accounts are associated with the digital banking business.
As of December 31, 2022, the former Signature Bank had total deposits of $88.6 billion and total assets of $110.4 billion. The Flagstar transaction included the purchase of about $38.4 billion of Signature Bridge Bank, N.A.'s assets, including loans of $12.9 billion purchased at a discount of $2.7 billion, the FDIC said.
$60 Billion in Receivership
The federal agency added that approximately $60 billion in loans will remain in the receivership for later disposition by the FDIC. In addition, the FDIC received equity appreciation rights in New York Community Bancorp, Inc., common stock with a potential value of up to $300 million.
The FDIC estimates the cost of the failure of Signature Bank to its Deposit Insurance Fund to be approximately $2.5 billion. The exact cost will be determined when the FDIC terminates the receivership.
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