In April 2025, the California Department of Financial Protection and Innovation (DFPI) issued a Consent Order against Hatch Bank requiring its Board of Directors to strengthen its supervision and direction of bank management, and its monitoring of the bank's AML/CFT program. Hatch Bank is a state-chartered, FDIC-insured, Banking as a Service (BaaS) sponsor bank.
The DFPI and the FDIC, during an examination of the bank, found unsafe or unsound banking practices, reportedly related to the bank's third-party business model. The consent order requires Hatch Bank’s Board to ensure that the Bank’s written AML/CFT Program is reasonably designed to assure and monitor the Bank’s compliance with the BSA by:
Updating its ML/TF Risk Assessment to consider all pertinent information, including information regarding third-party relationships;
Establishing a system of internal controls that includes AML/CFT resources reviews, third-party relationships review, and AML/CFT reporting reviews; and
Implementing procedures for the independent testing of the AML/CFT Program and the Bank’s compliance with the BSA.
The consent order can be found here.
