Recent developments about the New York State Department of Financial Services
(Not affiliated with NYDFS; just a blog.)
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
From the Wall Street Journal: – “New York’s financial regulator has appointed a former official from Dubai’s financial regulator to help oversee its virtual currency unit that regulates cryptocurrency businesses in the state. Ken Coghill, who most recently was the director and head of innovation and technology risk supervision at Dubai Financial Services Authority, … Read more
• According to the agency, “DFS has finalized the guidance with careful consideration of the valuable feedback received from regulated entities and other key stakeholders, including trade associations, advisory firms, universities, and the broader public.” • Superintendent Adrienne Harris has said recently, in several public settings (including the IIB Conference in March), that guidance for banks is … Read more
NYDFS has issued guidance concerning how Virtual Currency Entities handle customer complaints. According to the guidance: • The guidance applies to all “Virtual Currency Entities” (“VCEs”) • The guidance applies to individual customers – not institutions • The guidance requires VCEs to collect relevant data so DFS can assess whether they are resolving customer service requests and complaints … Read more
According to a stipulation filed (1822000-1822445-stipulation) in the BlockFi bankruptcy proceeding in New Jersey: • NYDFS had asserted unliquidated claims for violation of Financial Services Law § 408, one of its omnibus enforcement authorities, and the BitLicense Regulation, 23 N.Y.C.R.R. Part 200 • BlockFi does not appear to have ever obtained a license or charter from NYDFS. That … Read more
NYDFS took action against another insurance firm. According to the DFS allegations: • The benefits of blanket accident and health insurance policies issued to groups including institutions of higher education, day camps and childcare providers were found not bear a reasonable relationship to the premiums paid by these insureds. • The minimum loss ratios maintained by National … Read more
Speaking at the Institute of International Bankers Annual Conference in DC, Superintendent Harris discussed the following: • CHARACTER AND FITNESS FOR BANKING EXECS: Superintendent Harris responded to “the buzz” about this recent DFS guidance, saying it should be unsurprising that regulated banks would want to screen out personnel in sensitive positions with criminal records, dire financial problems, … Read more
According to the DFS allegations (and other public information): • State-owned Industrial and Commercial Bank of China has $22 Billion in assets in the New York branch alone, and over $5 Trillion globally, and is the world’s largest bank by assets according to the WSJ and third largest by capitalization according to Forbes. • ICBC entered into … Read more
• DFS has issued draft guidance that “outlines DFS’s expectations for how insurers develop and manage the integration of external consumer data and information sources (‘ECDIS’), artificial intelligence systems (‘AIS’), and other predictive models to mitigate potential harm to consumers.” • According to DFS: “The use of external consumer data and information sources (‘ECDIS’) and artificial intelligence systems … Read more