A nearly two-year chapter of heightened regulatory oversight has come to a close for Blue Ridge Bank, which announced it has been released from the consent order imposed by the Office of the Comptroller of the Currency (OCC).
The consent order stemmed from claims of ongoing deficiencies in Blue Ridge’s Bank Secrecy Act/Anti-Money Laundering compliance (BSA/AML). Specifically, the OCC called out alleged systemic internal control breakdowns, weak independent testing, and insufficient BSA staffing.
Ongoing Non-Compliance
In 2022, regulators raised red flags about these issues and Blue Ridge entered an agreement to correct the problems.
By 2024, the OCC said the bank failed to follow through, and the bank was accused of engaging in unsafe or unsound practices, including those related to BSA/AML, capital ratios, capital and strategic planning, liquidity risk management, and information technology controls.
At that point, the OCC was gearing up to issue charges against Blue Ridge, but to avoid the costs and headaches of the legal proceeding, Blue Ridge agreed to enter a consent order in January 2024.
Being under a consent order meant the bank faced strict regulatory requirements. Blue Ridge had to:
• Overhaul its risk management and compliance functions
• Hire a new risk management team, including leadership roles dedicated to compliance
• Improve internal controls and independent testing
• Scale back its fintech-heavy strategy and refocus on traditional community banking
• Maintain higher levels of capital
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The order also restricted certain business activities until the bank could demonstrate compliance. For the Richmond, VA-based community bank, this was a significant constraint, restricting growth opportunities and requiring substantial investment in compliance.
Released
On November 13, the OCC concluded that the consent order was no longer warranted, and it was terminated.
Blue Ridge did not admit or deny the claims outlined by the OCC but took action to make the requested changes.
“Being released from the regulatory consent order in less than 23 months is a testament to the hard work and the expertise of our team,” said Blue Ridge President and CEO, William Beale.
That work included a complete exit from the fintech Banking-as-a-Service channel, slashing problem assets, raising capital, and making significant new hires, including a chief risk officer, chief compliance officer, and BSA officer.
“Months ago, we turned our attention to community banking with a focus on improving our customer experience while attracting new loans and deposits. Release from the consent order increases our ability and flexibility to grow and expand in our key markets,” said Beale.
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