Fed warned Goldman’s fintech unit on risk, compliance oversight -FT (Aug. 31) By Reuters

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© Reuters. FILE PHOTO: People walk in the Goldman Sachs global headquarters in Manhattan, New York, U.S., November 15, 2021. REUTERS/Andrew Kelly/File Photo

(This Aug. 31 story has been corrected to say that Goldman bought GreenSky for $1.73 billion, not $2.2 billion, in paragraph 6)

(Reuters) – A division of Goldman Sachs’ transaction banking business (TxB) has stopped signing on riskier financial technology clients after a warning from the U.S. Federal Reserve over risk and compliance earlier this year, the Financial Times reported on Thursday.

The Fed has raised issues including insufficient due diligence and monitoring processes by the Goldman division when accepting high-risk non-bank clients, the report said, citing people with knowledge of the talks.

The Fed declined to comment while Goldman Sachs and TxB did not immediately respond to a Reuters request for comment on the report.

“We are not permitted to comment on any supervisory matters related to our regulators,” Goldman Sachs told FT.

The team targeted by the regulator provides banking infrastructure to fintech clients including payment start-ups Stripe and Wise, FT said. TxB’s other business, which provides cash payments services, was not criticized, FT added.

The transaction banking business is a part of the company’s Platform Solutions unit. The Platform Solutions unit also houses its credit card partnerships and fintech unit GreenSky, which Goldman agreed to buy for $2.2 billion in 2021, but later closed the deal for $1.73 billion.

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