Recent developments about the New York State Department of Financial Services
(Not affiliated with NYDFS; just a blog.)
In a pair of recent announcements, NYDFS: Announced the appointment of Gabriel O’Malley as the permanent Executive Deputy Superintendent for the Consumer Protection and Financial Enforcement Division. He joins after serving for many years in enforcement at the CFPB. Announced the launch of its regulatory management platform “DFS Connect.” According to the agency’s announcement, … Read more
NYDFS Superintendent Adrienne A. Harris participated in a fireside chat with the Institute of International Bankers and gave the following updates (summarized): • Impact of Change in Federal Administration: Superintendent Harris said that the change in administration at the CFPB and elsewhere would not alter DFS’ course; that there were gaps in consumer protection even before the … Read more
Superintendent Harris testified before NYS legislature and DFS issued its Regulatory Agenda. Per testimony: Looking Back: • “Since August 2021, DFS has adopted or amended 54 regulations, issued 98 pieces of regulatory guidance, and closed 117 enforcement actions resulting in more than $418 million in penalties.” •“We have addressed more than 157,000 consumer complaints and returned $$645 million to New York State consumers and health care providers, including over … Read more
Enforcement takeaways (according to DFS allegations in the Consent Order with PayPal): • NYDFS found customer data was exposed after PayPal implemented changes to make 1099-K forms available to more of its customers, after teams tasked with implementing these changes failed to follow proper procedures before the changes went live. • Malicious actors leveraged compromised credentials to … Read more
• NYDFS issued an Industry Letter and consumer bulletin that warns licensees and consumers to exercise caution regarding meme coins. According to the Industry Letter: • “The New York State Department of Financial Services (“Department”) is closely monitoring the rapid proliferation of sentiment-based virtual currencies. The platforms that enable the creation of these coins are not licensed … Read more
Two new cybersecurity enforcement actions from NYDFS, against GEICO and Travelers Indemnity Co. Enforcement takeaways are (according to DFS allegations): • GEICO experienced three cybersecurity events in a short period of time primarily involving customer interfaces for obtaining quotes and submitting claims and the web portal for GEICO agents, allowing threat actors to obtain driver license … Read more
• According to NYDFS, this is the second annual report, reviewing lending activity based on the New York Home Mortgage Disclosure Act (“HMDA”) data from 2023. • As in last year’s report, NYDFS analyzed mortgage lending in 23 different geographies, including New York State as a whole, all metropolitan statistical areas (“MSAs”) within the state, and a … Read more
Speaking to Bloomberg at DC Fintech Week, Superintendent Adrienne Harris stated about crypto enforcement: • Superintendent Adrienne Harris said “absolutely” when asked if there are “big cases coming down the pike for crypto firms, stable coin firms or even market makers in the space.” • Superintendent Harris elaborated, saying “I think for us we really make sure … Read more
Speaking this week at DACOM 2024, Superintendent Harris stated: • The Superintendent does not contemplate any amendments to the BitLicense, even though the regulatory regime will be in effect for 10 years coming June. • She said the BitLicense framework will continue to evolve instead through guidance, enforcement and other supervisory activity. She pointed to the agency’s … Read more
Many takeaways from this 43-page Consent Order from NYDFS against Nordea Bank, including the view of DFS that: • “[t]he combination of deficient AML controls, an unsophisticated transaction monitoring apparatus, and a decentralized global compliance program created a set of circumstances that exposed Nordea’s financial channels to a high risk of criminal abuse. Nordea’s relationships with … Read more