In 2012, the New York State Department of Financial Services (DFS) made a regulatory splash when it imposed a two-year monitorship on Standard Chartered Bank as part of an enforcement action. One commentator noted that the DFS settlement with Standard Chartered had “upended the regulatory dynamics of the international banking world” with this “staggering” resolution. Following the Standard Chartered matter, between 2012 and 2018, the agency imposed more than a dozen monitorships on large regulated entities. One by one these monitorships were wound down, and most concluded by 2019 or 2020, having achieved remedial or investigative purposes. (One exception was an expiring monitorship imposed on Deutsche Bank for anti-money laundering compliance failures, which was extended twice, once in 2017 and again in 2019.)
Notably, over the last year, DFS has imposed or threatened to institute a monitor in several enforcement actions, as a result of the agency’s view that the subject entities had permitted development of serious compliance deficiencies. This occurrence has led to speculation that monitorships are once again becoming a regular feature of DFS settlements. A closer look at these enforcement actions suggests that conclusion is, for now, tentative.
I discuss this emerging trend in a post carried on the blog of the NYU Program on Corporate Compliance and Enforcement.