Recent developments about the New York State Department of Financial Services
(Not affiliated with NYDFS; just a blog.)
Matthew L. Levine NYDFS penalized Columbian Mutual Life Insurance Company for allegedly failing to comply with New York law concerning unclaimed life insurance proceeds. Enforcement takeaways: – Recent enforcement efforts continue focus on Insurance Industry. – Consent Order for failing to comply with New York law governing unclaimed life insurance proceeds. – Investigation found company failed to cross-check … Read more
A survey indicates compliance officers are increasingly concerned about unfair regulatory enforcement against individual compliance officers. Some findings: – 72% are concerned regulators expanded the role of compliance officers and the scope of their responsibilities in imposing personal liability. – 70% believe the overall compliance function at their firms is under resourced. – 35% reported … Read more
NYDFS has appointed Peter Marton as its new Virtual Currency Chief. He serves as Deputy Superintendent of the Research and Innovation Division. More here: https://www.coindesk.com/policy/2022/01/06/nydfs-hires-new-deputy-superintendent-of-virtual-currency/
NYDFS announced a $3 million settlement with Pacific Life Insurance Company for engaging in the pension risk transfer business in New York without being licensed. NYDFS maintains its long-term focus on penalizing financial companies that conduct business in New York without the necessary license; this is construed as an unfair competitive advantage by the regulator. The resolution may be found here:
https://www.dfs.ny.gov/system/files/documents/2021/12/ea20211221_co_pacific_life.pdf
Multi-Factor Authentication (MFA) is a core tenet of cybersecurity and recent NYDFS enforcement actions have highlighted such deficiencies. NYDFS issued guidance on compliance with Part 500 regarding MFA, an important read, which may be found here: https://www.dfs.ny.gov/industry_guidance/industry_letters/il20211207_mfa_guidance
Matthew Levine and Ilene Jaroslaw teamed up to discuss how the federal regulatory and prosecutorial enforcement focus is shifting to cryptocurrency exchanges. The article in the New York Law Journal is found here: New York Law Journal – Biden Administration Increasingly Focused on Crypto Exchanges – Nov 29 2021
NYDFS Issued a $100 million to Mashreqbank. Enforcement takeaways:
– Conduct is failing to implement an effective OFAC compliance program, submitting incomplete reports to NYDFS, and failing to report misconduct to NYDFS;
– Conduct relates to violations of federal economic sanctions against Sudan
– NYDFS previously penalized Mashreq Bank $40 million in 2018 for a deficient BSA/AML program;
– No monitor imposed;
– Parallel actions by OFAC and the Federal Reserve Board.
The enforcement action may be found here: https://www.dfs.ny.gov/reports_and_publications/press_releases/pr20211109
NYDFS created a new Climate Risk Division, with a new Executive Deputy Superintendent overseeing the Division, which will:
– integrate climate risks into its supervision of regulated entities
– support industry growth in managing climate risks
– coordinate with international, national, and state regulators
– develop internal capacity on climate-related financial risks
– support capacity-building of peer regulators on climate-related supervision
– ensure fair access to financial services for all communities, especially those most impacted by climate change.
Press release is here: https://www.dfs.ny.gov/reports_and_publications/press_releases/pr202111032
Matthew Levine and Alicyn Cooley provide some hot takes on DOJ’s new actions and approaches to corporate criminal enforcement on the NYU Program on Corporate Compliance and Enforcement Blog. Blog post here: What’s Old Is New Again: DOJ’s New Corporate Criminal Enforcement Policies Equip Prosecutors with More Tools and Information
BIG News Out of DOJ Re: Monitorships: “To the extent that prior Justice Department guidance suggested that monitorships are disfavored or are the exception, I am rescinding that guidance. Instead, I am making clear that the department is free to require the imposition of independent monitors whenever it is appropriate to do so in order to satisfy our prosecutors that a company is living up to its compliance and disclosure obligations under the DPA or NPA.” — Deputy AG Lisa Monaco.
Announcement is here: https://www.justice.gov/opa/speech/deputy-attorney-general-lisa-o-monaco-gives-keynote-address-abas-36th-national-institute