- Key insight: The Federal Reserve Board Friday ended its two-year old enforcement action against United Texas Bank, signaling that the firm has addressed concerns related to its internal anti-money laundering controls.
- Expert quote: "Granting United Texas Bank a national bank charter sets a dangerous precedent that gives other banks the green-light to convert their charters to the lowest common denominator regulator rather than fix the serious issues that may put the U.S. financial system at risk." — Senate Banking Committee ranking meber Elizabeth Warren, D-Mass.
- Forward Look: The bank is still under a consent order from the Office of the Comptroller of the Currency, which became its primary regulator earlier this year.
The Federal Reserve Board terminated an enforcement action against a small Texas bank that drew the ire of the top Democrat on the Senate Banking Committee earlier this year.
The Fed announced the end of a consent order against Dallas-based United Texas Bank on Friday, freeing up the bank from the enhanced oversight regime it had been under since August 2024.
United Texas remains under a consent order from the OCC, which became the bank's primary regulator in June. The agency issued an enforcement action against the bank that same month, citing concerns about its compliance with anti-money laundering and Bank Secrecy Act requirements — the same issues
The $1 billion asset bank recently drew the
In the letter, which was sent to both Comptroller Jonathan Gould and Fed Vice Chair for Supervision Michelle Bowman, Warren accused the firms of turning a blind eye to issues at United Texas and set a precedent that troubled institutions could engage in "charter shopping" — switching regulators in search of more lenient supervision.
"Granting United Texas Bank a national bank charter sets a dangerous precedent that gives other banks the green-light to convert their charters to the lowest common denominator regulator rather than fix the serious issues that may put the U.S. financial system at risk," Warren wrote. "Considering that crypto technologies make legal enforcement against money laundering more difficult, allowing a bank that is already facing BSA/AML compliance issues to grow this business model poses significant risk to the financial system."
According to the OCC's cease and desist order, United Texas and the Fed agreed upon an action plan to address the bank's AML/BSA compliance in 2024. The bank committed to following that plan and addressing other issues, including customer due diligence and suspicious activity monitoring.
On Friday, the Fed also terminated an enforcement action against another small bank: Queens, New York-based Quontic Bank, which had been under a cease and desist order since 2018.
Quontic was cited by the Fed for a
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