When a bank is not meeting regulatory standards, action is taken. Enforcement actions are public and range from informal agreements to formal legal orders. Here’s what the most common formal actions mean.
Cease and Desist Orders (CDOs)
A Cease and Desist Order is a formal, legally enforceable action issued against a bank or an individual (e.g., a bank officer) to stop a specific unsafe or unsound practice or violation of law. The order will list the problematic activities and mandate the bank to take corrective action.
Key Characteristics:
- Public and Formal: Issued by the FDIC, Federal Reserve, or OCC and published on their websites.
- Immediate Effect: The order is legally binding; the bank must stop the alleged activity and fix the underlying issues.
- Covers Specific Issues: Commonly used for violations related to Anti-Money Laundering (AML), risk management, and consumer protection.
For example, a 2024 Cease and Desist Order against Evolve Bancorp required the bank to address deficiencies related to its risk management and anti-money laundering programs.
Consent Orders
A Consent Order is a formal enforcement action that the bank agrees to without admitting or denying guilt. It is often the result of a negotiated settlement with regulators. Once signed, it has the same legal force as a Cease and Desist Order.
Key Characteristics:
- Negotiated Resolution: The bank consents to the order, often to avoid a longer, costlier legal fight.
- Legally Binding: It carries the same weight as a Cease and Desist Order; the bank must comply with all terms.
- Comprehensive Reforms: Consent orders often require broad reforms, including hiring new compliance staff, improving internal controls, and submitting regular progress reports to the regulator.
For example, a Texas bank signed a Consent Order in 2026 to address deficiencies in its Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance program. It required the bank to implement a comprehensive risk assessment, enhanced independent testing, and a new suspicious activity monitoring program. This came after the bank had previously agreed to a Cease and Desist Order in 2024 over similar issues.
The Key Difference
A Cease and Desist Order is typically issued unilaterally by the regulator to halt specific violations, whereas a Consent Order is a bilateral agreement that often outlines a broader, long-term plan to fix systemic issues.