FDIC Issues Consent Order Against Choice Financial Group for BSA Violations
The FDIC made public a consent order against Choice Financial Group, the parent company associated with Choice Bank, for violations of the Bank Secrecy Act and deficiencies in its oversight of third-party fintech partnerships. The enforcement action was rooted in findings from a June 2023 regulatory examination that identified weaknesses in the bank's compliance management systems. Choice Financial Group had been active in providing banking services to fintechs, making it a notable player in the BaaS ecosystem.
The consent order requires the bank to address its compliance shortcomings and strengthen its third-party risk management framework. This action adds to a mounting list of regulatory enforcement actions against BaaS sponsor banks in 2023 and 2024, alongside similar actions against Blue Ridge Bank, Cross River Bank, and others. The pattern underscores that regulators view inadequate oversight of fintech partnerships as a systemic concern.
For the broader BaaS market, the action further narrows the pool of banks willing and able to serve as fintech sponsors.
- The growing number of enforcement actions against BaaS sponsor banks is consolidating the market around fewer, better-capitalized and more compliant banks
- Fintechs face increasing difficulty finding willing sponsor banks, potentially accelerating interest in middleware BaaS platforms that can demonstrate compliance infrastructure