Homeland Credit Unit, the country’s largest credit union based in Texas, lost a bid to extend its contract with the Department of Homeland Security (DHS) because of its failure to comply with federal laws.
In January, the Texas Department of Financial Institutions (DFI) approved the extension, citing the credit union’s “continued compliance with all applicable laws and regulations.”
The agency said in a press release that the bank’s “financial literacy and compliance practices remain strong.”
But the agency said the bank was “still subject to the threat of civil and criminal sanctions by the Department.”
The DFI said that “while DHS has indicated a willingness to work with the bank to mitigate risks, DHS is not in a position to extend this agreement.”
As The Hill previously reported, the bank has been under investigation by the FBI, which is looking into its handling of a major mortgage settlement.
In June, the Federal Deposit Insurance Corporation (FDIC) said the FDIC had reached a settlement with the company over its handling.
“The FDIC has informed us that the financial literacy and/or compliance practices of the Texas Credit Union, and its officers and directors, have not been met,” the FDic said in its announcement.
“This means that the FDIO cannot continue to have confidence in the conduct of the financial institution and the individuals at the credit center.”
DHS spokesman Sean McNally said in an email to The Hill that the agency “has not yet made a decision on whether to extend the extension” and declined further comment.
“We have not reached any decisions yet, and we do not anticipate making any decisions on our own in the near future,” he said.
The department also said in the statement that the department “does not believe there is any reason to believe that the Texas credit union is engaged in or engaged in conduct that violates the law.”
“The department continues to be concerned about the conduct at the Texas office, and has reached out to the state agency to work through the issues,” McNally added.
The Texas Credit Bank was the first credit union to be hit with a DHS civil forfeiture investigation after a criminal investigation.
In May, a federal grand jury indicted the Texas bank and three others, accusing them of “fraudulent and racketeering activities.”
The bank and the others were indicted on charges including money laundering, conspiracy, mail fraud, money laundering conspiracy, money transmitting and wire fraud.
The banks had not previously faced any criminal investigations or civil forfeiture.
DHS has also opened an investigation into the bank, which has said that it has been cooperating with the agency.
The investigation stems from the seizure of approximately $2.3 million from the Texas Branch of the Credit Union Administration in 2016.
The bank is also part of a $872 million settlement with a U.S. Department of Justice (DOJ) agency that said it mismanaged $2 billion in the banking sector in the United States.
The government claimed that the banks’ failure to pay their employees amounts to “reckless and unconscionable misconduct.”
In February, the Justice Department said that the Department “will not hesitate to use civil and/ or criminal sanctions” against any company that fails to comply fully with the terms of its settlement agreement with the DOJ.
The Justice Department also said that there is “no doubt” that the state government “intentionally misled” regulators and that “state employees should have known” the bank could face criminal charges for its “failure to comply.”
The Texas Department is a federal agency that oversees state and local banking systems, and the state is one of the largest federal beneficiaries of the government’s Troubled Asset Relief Program (TARP).
The bank’s employees include federal officials, state attorneys general, congressional staffers and representatives from the state’s public safety agencies.
The Department of the Treasury also provides funding to the bank.