--- title: "The 2024 Federal Reserve order against Evolve and its aftermath" language: en canonical: https://dossiertwist.com/dossiers/evolve-bank-trust/regulation/ as_of: 2026-10-16 keywords: ["Evolve Bank & Trust","Evolve Bancorp","Synapse Financial Technologies","Synapse Brokerage","Banking-as-a-Service","Open Banking","cease-and-desist order","Federal Reserve","Arkansas State Bank Department","FBO accounts","Yotta Technologies","Lineage Bank","AMG National Trust","Scot Lenoir","Robert Hartheimer","data breach","MDL 3127","Ankura reconciliation","CFPB","Coastal Community Bank"] --- # The 2024 Federal Reserve order against Evolve and its aftermath **Question.** Why did the Federal Reserve and Arkansas regulators put Evolve under a cease-and-desist order, and what does it require? **Answer.** Examinations in 2023 and early 2024 found deficiencies in the Open Banking Division's risk management, consumer compliance and anti-money-laundering controls, including a Bank Secrecy Act programme violation and gaps in sanctions compliance. The June 2024 order, accepted by the bank and its holding company without a hearing, requires plans for board oversight, compliance and fintech ledger responsibilities, a review of past fintech transactions, and approval before new fintech partners, dividends or debt payments; no termination had been announced by October 2026. Senators criticised the Federal Reserve's supervision, and a newsletter reported a years-long wire-screening failure and continuing federal probes. ## The order and its findings - Analysis: Effective June 11, 2024, the Board of Governors of the Federal Reserve System and the Arkansas State Bank Department issued a cease-and-desist order upon consent to Evolve Bancorp, Inc. and Evolve Bank & Trust (Docket Nos. 24-012-B-HC and 24-012-B-SM) under section 8 of the Federal Deposit Insurance Act. The companies consented to settle without a formal proceeding, before any notice of charges, hearing or adjudication of facts or law, so the order is not a court judgment. Lenoir signed for the holding company as chairman and Stafford for the bank as president and chief executive. The order remains in effect until the supervisors stay, modify, terminate or suspend it in writing. [src-003] - Analysis: The order recites that the Federal Reserve Bank of St. Louis and the Arkansas department found risk-management deficiencies in the Open Banking Division in a safety-and-soundness examination issued on August 11, 2023; that the Reserve Bank found consumer-compliance risk-management deficiencies in the division in an examination issued on August 30, 2023; and that a further examination issued on January 10, 2024 found additional anti-money-laundering deficiencies amounting to a Bank Secrecy Act compliance-programme violation, together with shortcomings in complying with the sanctions rules of the Treasury's Office of Foreign Assets Control. It also records that the companies had begun remedial action. The order describes the division's strategy as offering deposit accounts and payment processing to fintech partners, which in turn serve end users directly or through other entities. [src-003] ## What the order requires - Analysis: The bank must submit plans acceptable to the supervisors for board oversight; Open Banking risk management, including written board approval before onboarding new fintech partners or products; consumer compliance; liquidity and funding concentrations; interest-rate risk; internal audit; Bank Secrecy Act and anti-money-laundering compliance, customer due diligence, transaction monitoring and suspicious-activity reporting; and sanctions compliance, with quarterly progress reports. It had 30 days to adopt interim monitoring procedures for international wire services, and it must adopt policies that clearly define and maintain the ledger and sub-ledger responsibilities of the bank and its fintech partners, including during a material business disruption. An independent consultant must review fintech partners' transactions through the bank from April 1 to September 30, 2023 to determine whether suspicious activity was properly identified and reported, and any unreported matters found must be reported. [src-003] - Analysis: With immediate effect the bank may not, without prior written approval, establish new fintech partners, subsidiaries, business lines, products, programmes, services or programme managers in the Open Banking Division or offer new products to existing partners, and it must analyse the liquidity impact before exiting a fintech relationship. Evolve Bancorp and the bank may not pay dividends, buy back shares or make other capital distributions, including interest on subordinated debentures, or incur, increase, prepay or guarantee debt without the approval of the Reserve Bank, the Board's Director of Supervision and Regulation and the Arkansas department; the holding company must submit annual cash-flow projections. Both companies must give federal notice before appointing directors or senior executive officers and observe the federal limits on indemnification and severance payments. [src-003] - Analysis: The Federal Reserve Board's press-release lists for 2025 and 2026, through a release of October 16, 2026, announce terminations of enforcement actions against other banks but none mentioning Evolve Bank & Trust or Evolve Bancorp; that absence is not an official statement of the order's status, and the Board does not necessarily announce every modification. [src-079] [src-080] ## Reported screening failure and probes - Analysis: A fintech industry newsletter reported in July 2024, and again in September 2025, that auditors reviewing the bank's anti-money-laundering practices had found it had not properly screened international wire transfers for about seven years because of a 'coding error' by Hank Word, then its chief technology officer. The audit report is not in the retained record, and no response from the bank or Word to the account was found. The order had required interim monitoring procedures for international wire services within 30 days and an independent consultant's review of the bank's domestic and international wire activity. In September 2025 the newsletter also wrote that the FBI, the U.S. Attorney's Office for the Southern District of New York and the Justice Department's Money Laundering and Asset Recovery Section 'appear to be continuing to probe' Evolve and its partners over as much as $95 million in missing depositor funds and transnational money movement through the bank; it cited no charging document or official statement, and no criminal charge against the bank appears in the retained record. [src-026] [src-003] ## Senators' letters - Analysis: On June 28, 2024 Senators Sherrod Brown, Ron Wyden and Tammy Baldwin, among others, wrote to Evolve's chief executive W. Scott Stafford and to Synapse's equity holders, fintech operators and partner banks that they were collectively responsible for customers' frozen funds, pointed to a potential shortfall of $65 million to $96 million and urged them to restore access immediately. On April 22, 2025 Senators Elizabeth Warren, Baldwin, Wyden and John Fetterman told Federal Reserve Governor Michelle Bowman that the Board had failed to supervise Evolve appropriately, harming more than 100,000 consumers whose funds were frozen, and noted that the bank's 2023 consumer-compliance examination ended in August 2023 while the enforcement action came in June 2024. These letters set out the senators' views and assessments; they are not findings by the Board or a court. [src-060] [src-031] [src-003] - Analysis: Citing press reports, the 2025 letter says Evolve told Synapse in August 2022 that it intended to end the relationship, that staff at both companies knew of missing funds by 2023 without notifying customers, that Evolve charged about $26 million in fees directly from Synapse customer accounts between 2019 and 2023, and that reporting suggested a federal grand jury proceeding; the underlying statements are not in the retained record. Evolve's position, as reported elsewhere, is that it gave Synapse detailed information on every fee charged and that allocating fees to platforms and end users was Synapse's responsibility as programme manager. [src-031] [src-096] - Analysis: On March 23, 2026 Senator Warren, ranking member of the Senate Banking Committee, asked Beast Industries why Step, the teen banking app it was acquiring, which partners with Evolve for banking services, had chosen the bank and whether it knew of Evolve's role in the Synapse fallout, its 2024 data breach and the June 2024 enforcement action. She cited a court mediator's finding that up to $96 million in customer funds could not be located at Evolve or other banks, in part because of poor record-keeping; the mediator's determination itself was not retained. [src-058] ## Sources - [src-003] Order to cease and desist issued upon consent: Evolve Bancorp, Inc. and Evolve Bank & Trust, Board of Governors of the Federal Reserve System, 2024-06-11 - [src-079] Press releases 2026, Board of Governors of the Federal Reserve System, 2026-10-16 - [src-080] Press releases 2025, Board of Governors of the Federal Reserve System, 2025-12 - [src-026] Media source · src-026 - [src-060] Letter from senators to Evolve, Synapse equity holders, fintechs and partner banks, U.S. Senate Committee on Banking, Housing, and Urban Affairs, 2024-06-28 - [src-031] Letter from Senators Warren, Baldwin, Wyden and Fetterman to Governor Bowman about Evolve, U.S. Senate Committee on Banking, Housing, and Urban Affairs, 2025-04-22 - [src-096] Media source · src-096 - [src-058] Letter from Senator Warren to Beast Industries regarding its acquisition of Step, U.S. Senate Committee on Banking, Housing, and Urban Affairs, 2026-03-23