Federal Reserve Board Takes Action Against Jiko Group & Green Dot

The Federal Reserve Board has announced significant enforcement actions against Jiko Group, Inc. and Green Dot Corporation, targeting major deficiencies in financial management and consumer compliance.

The Federal Reserve Board fined Green Dot Corporation $44 million for numerous violations related to consumer protection. The firm was found to have engaged in unfair and deceptive practices concerning its prepaid debit card products and tax return preparation payment services. Issues included inadequate disclosure of fees and improper blocking of customer accounts, along with insufficient consumer compliance risk management and anti-money laundering programs.

To remedy these violations, Green Dot must undertake several corrective measures. The company is required to hire an independent third-party to improve its consumer compliance risk management and address the root causes of consumer complaints. Additionally, Green Dot must develop a robust anti-money laundering program and conduct a review of specific transaction activities to ensure compliance with regulatory standards.

Jiko Group Issued Cease & Desist Order

In a separate action, Jiko Group, Inc., headquartered in San Francisco, has been issued a consent Cease and Desist Order following an inspection by the Federal Reserve Bank of San Francisco in October 2023. The inspection revealed critical weaknesses in Jiko’s financial management, including issues with capital planning, earnings, and liquidity.

The Federal Reserve Board's order requires Jiko to take immediate corrective actions to address these problems. The firm must strengthen its board oversight, enhance its financial and managerial resources, and develop a detailed strategic plan to improve its overall condition. Key directives include implementing a comprehensive liquidity risk management program and providing detailed cash flow projections.

Additionally, Jiko must submit plans to maintain adequate capital and avoid declaring dividends or repurchasing shares without prior approval. The company is also required to comply with legal requirements for executive appointments and indemnification and to provide regular progress reports on its compliance efforts.

The Federal Reserve Board emphasized its commitment to enforcing regulatory standards and protecting consumers through these enforcement actions. The directives issued to Jiko Group, Inc. and Green Dot Corporation reflect the Board's ongoing efforts to address significant financial and compliance issues and promote stability and integrity within the financial sector.

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