Federal Reserve's Crackdown: Puerto Rico's BSJI Appeal Rejected by Court

The Federal Reserve Bank of New York successfully quashed an appeal by Puerto Rican lender Banco San Juan Internacional (BSJI), which complained about losing access to the U.S. central banking system over links to Venezuela. The court affirmed that regional Federal Reserve banks can choose whether to grant master accounts.

The Federal Reserve Bank of New York triumphed in its legal battle against a Puerto Rican lender, Banco San Juan Internacional (BSJI), as a court rejected the bank's appeal regarding its exclusion from the U.S. central banking system due to connections with Venezuela.

In a unanimous decision, the 2nd U.S. Circuit Court of Appeals in Manhattan dismissed BSJI's assertion that the Federal Reserve Act guaranteed it a 'master account' necessary for accessing the Fed's electronic payment system. The court highlighted that the regional Federal Reserve banks possess the discretion to allow or deny such accounts.

BSJI initiated the lawsuit in 2023 after its 11-year-old account was set to close over concerns of non-compliance with U.S. sanctions. The court found no discriminatory motive behind the decision, adding it was part of a broader effort to regulate banking operations linked to cryptocurrency and cannabis.