Fed A segment of Goldman Sachs’ transaction banking business (TxB) has decided to halt onboarding riskier financial technology clients following a cautionary note from the U.S. Federal Reserve regarding concerns over risk and compliance earlier this year, as reported by the Financial Times on Thursday.
According to sources familiar with the matter, the Federal Reserve has highlighted various issues, including insufficient due diligence and monitoring procedures within the Goldman Sachs division when accepting high-risk non-bank clients. The Federal Reserve declined to provide any comments on the matter, and Goldman Sachs, as well as TxB, did not immediately respond to a Reuters request for their remarks on the report.
Goldman Sachs stated, “We are not permitte to comment on any supervisory matters related to our regulators,” to the Financial Times.
Fed The specific team under regulatory scrutiny is responsible for providing banking infrastructure services to fintech clients, which includes prominent payment startups like Stripe and Wise, according to the Financial Times. However, TxB’s other business segment, which offers cash payment services, has not come under criticism, as reported by the Financial Times.
Fed It’s worth noting that the transaction banking business is a component of Goldman Sachs’ Platform Solutions unit, which also houses its credit card partnerships and the fintech entity GreenSky. Goldman Sachs initially agreed to acquire GreenSky for $2.2 billion in 2021 but ultimately closed the deal for $1.73 billion.