A Malvern Bancorp director has resigned following a disagreement over one of the Paoli, Pa., company's clients.
Michael Moss wrote in a Feb. 22 letter to Malvern's board that the $727 million-asset company faces "grave legal and reputational risks" for doing business with a foreign national. The letter, which had several redactions that included the client's name, was attached to a regulatory filing disclosing Moss' resignation.
The client "bears all the hallmarks of exactly the sort of individual the Bank Secrecy Act's know-your-customer rules were designed to detect," Moss added, claiming that the client had been "expelled from his own banking system" and had been "doing business in offshore havens known for money laundering."
Moss expressed his opinion that conducting business with the individual, whom he claimed was introduced to the bank by an unnamed activist investor, puts Malvern at risk of violating anti-money-laundering requirements of the Patriot Act, the Bank Secrecy Act and the Foreign Corrupt Practices Act, along with sanctions tied to the Treasury Department's Office of Foreign Assets Control.
Malvern said in its filing that the client is a depositor. While Malvern did not disclose any more information about the client, the filing noted that the company had opened private banking offices in Villanova, Pa., and Morristown, N.J., as part of its strategic business plan.
"The bank conducted proper due diligence and followed all applicable legal requirements, including those of the Bank Secrecy Act, in connection with opening the depositor's account," the filing said. After receiving Moss' letter, Malvern's management, including its BSA officer and compliance officer, conducted a review and "confirmed that all legal requirements were properly met."
Malvern said its management team will continue to monitor the depositor's account "in accordance with all applicable laws and sound banking practices."
Moss, who had just joined Malvern's board last year, is chief executive of Intercontinental Development, a privately held real estate investment company in Ottsville, Pa. He was also a founder and director at Team Capital Bank from 2005 to 2014, when the Bethlehem, Pa., company sold itself to Provident Financial in Jersey City, N.J.
Moss' departure is the latest shake-up on Malvern's board. The company announced in February that two directors, including a former chairman, had resigned shortly after Lawrence Seidman, an activist investor in New Jersey, vowed to withhold support for them.
Malvern recently appointed Howard Kent to succeed George Steinmetz as its chairman; Steinmetz remains a director. Kent was on the board of Center Bancorp, where Anthony Weagley was chief executive. Weagley was hired in 2014 as Malvern's CEO.
Since becoming Malvern's CEO, Weagley has formed a partnership with a Delaware wealth management firm, hired new loan officers and a new chief risk officer and presided over the bank's release from a regulatory enforcement action.