March 30, 2023

Charlottesville, Virginia-based Blue Ridge Financial institution has agreed to bolster its anti-money laundering program and enhance its oversight of fintech companions in response to considerations from federal regulators.

An settlement with the Workplace of the Comptroller of the Forex, whose considerations helped scuttle a beforehand deliberate merger, would require Blue Ridge to make a number of enhancements to “handle the dangers posed by” its fintech partnerships, the financial institution stated Thursday in a securities submitting

The settlement, which took impact Monday, requires the financial institution to get a non-objection from the OCC earlier than it indicators any contracts with new fintech companions or provides new merchandise with its present companions. 

After the Workplace of the Comptroller of the Forex raised considerations about Blue Ridge Financial institution’s proposed merger with one other Virginia financial institution, the deal was referred to as off in January.

Andrew Harrer/Bloomberg

The financial institution stated within the submitting that it “continues to cooperate with the OCC, and to work to carry the Financial institution’s fintech insurance policies, procedures and operations into conformity with OCC directives.”

“The Financial institution’s board of administrators and administration are dedicated to completely addressing the provisions of the Settlement throughout the required timeframes, and imagine the Financial institution has made progress in addressing the necessities to this point,” the financial institution said.

Blue Ridge CEO Brian Plum declined to remark additional. An OCC spokesperson additionally declined to remark, saying the company doesn’t touch upon particular banks or enforcement actions.

The financial institution’s securities submitting didn’t element the OCC’s particular considerations, however Blue Ridge has confronted scrutiny from client advocates over an income-share settlement product that it has supplied to college students. Critics say the product might result in abuses.

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Below the earnings share agreements, which the financial institution has financed with the fintech MentorWorks, college students get financing that they comply with repay with a portion of their future earnings.

Final yr, Blue Ridge Financial institution’s dad or mum firm stated that the OCC had raised “sure regulatory considerations” that had been delaying its merger with one other Virginia financial institution, FVCBankcorp. The 2 banks referred to as off the deal in January.

A number of elements of the OCC enforcement motion revolve round enhancements to how Blue Ridge complies with the Financial institution Secrecy Act. The settlement requires the financial institution to “undertake, implement and cling to an efficient written” Financial institution Secrecy Act danger program that additionally covers any actions that its fintech companions conduct, in keeping with the securities submitting.

The financial institution additionally should develop a brand new Financial institution Secrecy Act audit program with an “expanded scope” that covers its fintech companions, and it should make sure that its Financial institution Secrecy Act division is “appropriately staffed with personnel which have requisite experience, coaching, expertise and authority,” in keeping with its submitting.

Financial institution officers stated they agreed to submit an “motion plan” to the OCC, explaining how Blue Ridge will enhance its monitoring of suspicious exercise, together with “excessive danger buyer exercise involving the Financial institution’s third-party fintech companions.”

The regulatory settlement didn’t say whether or not Blue Ridge will face any financial penalties.