The Federal Deposit Insurance Corporation (FDIC) has concluded its enforcement actions against two banks in the United States by terminating consent orders for Israel Discount Bank of New York and F&M Bank and Trust Company, located in Georgia. These orders were among eight regulatory actions initiated by the FDIC in October, designed to address various compliance deficiencies within financial institutions. The reversal signals a resolution to previously alleged issues that each bank was required to address. Historically, such consent orders have called for stricter regulatory oversight and emphasized comprehensive internal reviews to ensure adherence to banking standards. The FDIC’s latest decision emphasizes its continued role in enforcing banking regulations while underlining improvements made by the banks in question.
What Led to the FDIC’s Decision?
The conclusion of the consent order for Israel Discount Bank of New York delivers closure to a matter first raised in May 2023 concerning alleged shortcomings in its Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) program. These issues highlighted a need for improved oversight regarding the Bank Secrecy Act compliance. Without admitting guilt, the bank agreed to enhance oversight of its AML/CFT program, select independent evaluations of the system’s robustness, and ensure compliance monitoring. The FDIC’s termination of the order on October 10 signifies confidence in the bank’s compliance adjustments. In the words of a bank official,
“We have consistently worked to align our operations with regulatory expectations.”
How Does This Affect F&M Bank and Trust Company?
For F&M Bank and Trust Company, the termination of its consent order—which had been in place since February 2011—marks the resolution of concerns over unsafe banking practices. These practices were linked to weaknesses in asset management, earnings, and risk sensitivity. Consequently, the bank’s board of directors was tasked with enhancing their involvement, recruiting qualified management, ensuring adequate capital levels, and addressing flagged assets. The FDIC withdrew its order on October 29, signaling its approval of the bank’s remedial actions. A representative from F&M Bank stated,
“Meeting the terms of the order was a priority for our institution.”
The FDIC also terminated other regulatory actions, including one issued in September 2014 against an unnamed bank due to changes in the Fair Hiring in Banking Act. Additionally, orders concerning individual bank employees were part of the regulatory measures, primarily addressing fraudulent misrepresentations linked to financial aid under the CARES Act.
Upon considering previous instances of FDIC consent orders, the agency typically requires adherence to strict corrective measures. This outcome is consistent with the pattern whereby banks must engage in significant internal changes to secure a successful termination of such orders, representing both a challenge and learning opportunity for the institutions involved. Compared to actions from previous years, these terminations reinforce the dynamic nature of regulatory compliance for banks.
This development underscores the FDIC’s vigilant approach to maintaining banking integrity and adherence to regulations. Consent orders serve as a mechanism for the FDIC to ensure that banks address deficiencies expediently and thoroughly. For Israel Discount Bank of New York and F&M Bank and Trust Company, concluding the reporting requirements represents closure and a step toward reinforcing public trust. To ensure sustained compliance, these institutions are likely to continue prioritizing comprehensive risk management and regulatory alignment.
