(Seattle, WA) Washington State Attorney General Bob Ferguson announced Tuesday morning that Metropolitan Commercial Bank will pay $10 million to Washington state as part of his innovative fraud recovery program to return unemployment funds stolen during the COVID pandemic. The initiative has so far brought in more than $52 million from banks across the U.S. that accepted stolen unemployment funds.
According to Ferguson’s office, Metropolitan’s resolution reflects the second phase of the office’s investigation, which will seek out non-bank financial technology, “fintech,” companies that the criminals used to hold and help transfer stolen funds in violation of the Consumer Protection Act.
Ferguson asserts that in 2020, Metropolitan, as the sponsoring bank for the fintech company MovoCash Inc., accepted more than $15 million from criminals who stole from the state unemployment fund. They used stolen identities to get the funds then used Movo accounts to transfer funds through the bank. Ferguson asserts that Metropolitan received the transfers of stolen money without ensuring that proper anti-fraud, anti-money laundering and customer identification screens were in place.
“More than four years ago, criminals targeted our state unemployment fund, and my office has not stopped working to recover what they stole,” Ferguson said. “Washington has been a national leader on this effort. We were the first state to use forfeiture laws to recover stolen dollars that were frozen in accounts. Now we’re the first to resolve an investigation into a fintech company that the criminals used to move the money. There is still more work ahead.”
Metropolitan served as the issuing bank for third-party prepaid or debit card programs, called digital banking programs, offered by fintech companies. To gain access to the U.S. financial network, some unregulated fintech companies essentially lease the bank identification numbers of regulated financial institutions to provide digital banking services to their customers.
In early 2020, criminals used a digital banking program marketed by Movo to steal more than $15 million in unemployment benefits paid by the state’s Employment Security Department. Between April and July 2020, Metropolitan accepted more than 3,700 fraudulent money transfers of Washington state unemployment benefit funds through Movo. After financial regulators informed Metropolitan about the illegal scheme, it froze and returned $5.5 million back to the state.
Ferguson subsequently recovered more than $732,000 from Metropolitan’s accounts using his forfeiture power. Ferguson then investigated Metropolitan for violations of the state Consumer Protection Act related to Movo’s program, and the bank cooperated with the investigation.
To avoid a lawsuit, Metropolitan will pay $9 million more to the Employment Security Department as restitution that will go back into the state unemployment trust and federal treasury. The bank will also pay $1 million to the Attorney General’s Office to cover investigation costs and fund future consumer protection activities.