The Federal Reserve has terminated consent orders against Goldman Sachs and Metropolitan Commercial Bank, closing enforcement actions involving Goldman’s alleged role in the 1MDB scandal and MCB’s allegedly fraud-ridden MovoCash prepaid card program.
Goldman, which allegedly failed to maintain appropriate oversight, internal controls and risk management of the Malaysian state-owned investment and development company, 1Malaysia Development Berhad, was ordered in 2020 to improve its risk management and oversight functions of “significant and complex transactions,” as well as enhance its due diligence and expand its anti-bribery compliance program.
The Fed fined Goldman $154 million at the time – a relatively small part of the punishment Goldman received overall for its involvement with 1MDB. The Wall Street bank agreed to pay the Malaysian government $3.9 billion to settle the scandal. The bank’s CEO, David Solomon, faced a 36% compensation decrease in 2021.
In all, Goldman paid more than $5 billion in penalties – to Malaysia, the U.S. Justice Department and regulators in the U.K., Singapore and Hong Kong – in connection with the scandal; and some former executives landed in prison.
This summer, another Wall Street heavyweight – JPMorgan Chase – paid $330 million to resolve existing and potential claims for its part in the 1MDB scandal.
MCB’s now-terminated consent order, issued in 2023, concerned its alleged violation of customer identification rules and inadequate risk management practices connected to prepaid card accounts for MovoCash.
MCB failed to maintain a viable anti-money laundering program and engaged in unsafe and unsound banking practices in its oversight of MovoCash, according to an investigation by the New York Department of Financial Services, which coordinated with the Fed.
As MovoCash’s sponsor bank, Metropolitan was supposed to ensure the program complied with applicable laws. But as early as January 2020, bad actors were able to open MovoCash accounts with illegally obtained personal information, routing direct deposit payroll and government benefits to fraudulent accounts, NYDFS found.
Penalties from both the Fed and NYDFS added up to nearly $30 million, with roughly $14.5 million going to the Fed.
The central bank required Metropolitan to enhance its know-your-customer procedures, due diligence policies and oversight of third-party relationships, saying in 2023 that robust customer vetting and third-party risk management could have disrupted the scheme.
A spokesperson for the Fed declined to comment beyond Tuesday’s press release.
Spokespeople for Goldman and MCB did not immediately respond to a request for comment.
