Federal banking regulators have mandated that Community Federal Savings Bank, situated in Queens, New York, overhaul its anti-money laundering (AML) program due to significant deficiencies exposed during regulatory assessments. This latest enforcement action from the Office of the Comptroller of the Currency (OCC) highlights systemic failures in the bank’s controls surrounding customer due diligence, suspicious activity monitoring, and compliance with the Bank Secrecy Act (BSA).
The OCC’s consent order, finalized on April 24, cites the bank’s inability to manage the heightened risks associated with its rapidly expanding payment processing operations. As of the end of December 2025, Community Federal reported approximately $866 million in assets. Despite being a relatively small institution, the bank plays a critical role as a sponsor for major fintech operations, including being the backend bank for Wise’s U.S. dollar accounts and Crypto.com’s prepaid card services.
A spokesperson for Community Federal prompted assurance, stating that the bank takes the OCC’s directives seriously and has already begun implementing necessary changes to its compliance infrastructure. They indicated that enhancements had been initiated well in advance of the enforcement order, with significant investments allocated to improve systems since mid-2024. The spokesperson expressed confidence that remediation efforts were “well underway” and could be resolved in the months to come.
The OCC’s findings were stark, presenting a narrative of growth without adequate risk management. The order emphasized that, despite an increase in transaction volumes—including a notable uptick in wire and ACH activity—Community Federal did not develop sufficient controls to address these risks. A critical concern was the bank’s automated system, which was found to be closing a substantial proportion of alerts related to potentially suspicious transactions without adequate evaluation.
Additional shortcomings were identified in the bank’s customer due diligence processes, which were labeled as ineffective. The OCC noted that Community Federal was unacquainted with the specifics of its customers’ business models or the nature of transactions facilitated through its payment processing capabilities, particularly those involving foreign financial institutions.
The report further highlighted deficiencies in independent testing procedures, indicating that internal audits failed to recognize the weaknesses in the BSA/AML programs. As a result, federal regulators cited violations related to the requirements established under the Bank Secrecy Act and the suspicious activity reporting mandates set forth by federal law.
The OCC previously engaged with Community Federal in 2020, addressing similar compliance issues linked to strategic planning and risk management processes. In that earlier agreement, the bank was categorized as being in “troubled condition” status and was required to establish a compliance committee and develop a comprehensive strategic plan.
To respond to the recent enforcement order, Community Federal must appoint a compliance committee comprising a majority of independent directors within 15 days. Within 90 days, the bank is required to submit an actionable plan detailing remediation steps. Furthermore, it must hire two external consultants; one will conduct a thorough review of the bank’s AML program, and the other will assess historical transactions to determine if any suspicious activity reports should be generated for previously unexamined activities.
Notably, the current consent order did not impose a civil monetary penalty or restrictions on the bank’s growth, and it did not name or bar individual officers or directors from their roles. The order stipulates that the OCC reserves the right to pursue further actions against the bank or its affiliates if necessary.
As Community Federal navigates this enforcement action, it remains a pivotal partner for various fintech entities, including Wise and Crypto.com, underscoring the importance of robust compliance measures in maintaining trust and integrity within the rapidly evolving financial technology sector.
