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Fed reportedly warns Goldman Sachs over fintech compliance risk

US regulators have raised issues over a lack of due diligence and monitoring process for high-risk clients at the bank

Goldman Sachs David Solomon 2

David Solomon/Goldman Sachs

After warnings from US banking regulators over risk and compliance, a division of Goldman Sachs has reportedly stopped taking on riskier fintech clients.

The Federal Reserve has raised issues around insufficient due diligence and monitoring processes when the bank’s transaction banking business (TxB) accepts high-risk non-bank clients according to sources, as reported by the Financial Times.

Goldman Sachs told the publication it is “not permitted to comment on any supervisory matters related to our regulators”.

The team the regulator raised issues with provides banking infrastructure to companies including Stripe and Wise, while TxB’s other cash payments services business was not criticised.

This news quickly follows Goldman Sachs selling off its financial planning unit in an extended retreat from consumer banking.

The division's purchase in 2019 was one of a series CEO David Solomon made since taking over as head of the company in 2017.

This latest critique from the Fed is another blow to the bank’s efforts to venture into new areas and make more partnerships.

Goldman Sachs also massively pivoted on its consumer move with Marcus, selling off billions from the division’s loan portfolio over the past year.

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