Recent developments about the New York State Department of Financial Services
(Not affiliated with NYDFS; just a blog.)
NYDFS entered into a Consent Order for alleged cybersecurity violations against wealth management firm SA Stone, which sells insurance products to customers. According to DFS allegations: • SA Stone is an independent broker/dealer focusing on wealth management, holding licenses to sell insurance to its customers in New York. • SA Stone experienced several reportable cybersecurity breaches arising … Read more
FROM NYDFS SUPERINTENDENT HARRIS’ PREPARED TESTIMONY BEFORE US SENATE BANKING COMMITTEE ON DFS REFORMS FOLLOWING BANKING CRISIS: “DFS has been monitoring the liquidity of [high risk] institutions on a daily basis, which entails frequent engagements with these institutions, as well as close coordination with our federal counterparts. . . . I directed DFS’s Office of … Read more
according to the proposed guidance: · “Covered Institutions are expected to update and modernize their policies and procedures to require vetting of Designated Persons—including senior officers and members of any governing board—both at onboarding and on a regular ongoing basis, to ensure a robust initial vetting and to confirm that no new circumstances or conflicts … Read more
DFS Virtual Currency Peter Marton testified on April 25 before the New York Senate Banking Committee. Some takeaways from his testimony: • Virtual currency division has hired 40 new staff since Jan. 2022, with total reports of 57 • The application backlogs remains; DFS has granted four BitLicenses in last 15 months • The application queue remains high, but … Read more
NYDFS Superintendent Harris has called for “real time” regulation of crypto, according to Axios: “Harris appears to want to tighten the screws on crypto regulation, with what she’s calling: “real-time supervision.” “This idea that regulators should just come in once a year, go through books and interview staff … was fitting maybe for the 20th-century … Read more
At the Chainalysis Links 2023 conference, the WSJ reported that Superintendent Harris stated that the crypto industry must still mature in compliance: “Speaking more broadly about the crypto industry, Ms. Harris said the sector still lacks maturity in its compliance programs even as it has grown in prominence. During many of the NYDFS’s examinations and … Read more
NYDFS penalized payment platform Bitpay for alleged violations of its regulations governing BSA/AML requirements and cybersecurity obligations. Here are some hot takes from DFS’ allegations set forth in its Consent Order: • Bitpay provides a payment platform for merchants wanting to receive Bitcoin payments; • Bitpay conducted only one cybersecurity risk assessment over a 4-year period; • Bitpay … Read more
According to a new policy memo to be adopted in the U.S. Justice Manual, “[c]onsistent with the Criminal Division’s approach for the past several years, as well as recent Department-wide guidance, any submission or selection of a monitor candidate by either the Company or the Criminal Division should be made in keeping with the Department’s … Read more
NYDFS has announced that it has taken steps to increase its ability to detect virtual currency fraud. In a press release, DFS stated: “The new enhancements will provide the Department with additional capabilities to detect potential insider trading, market manipulation, and front-running activity associated with Department-regulated entities’ and applicants’ exposure or potential exposure to listed … Read more
According to Forbes [HERE]: “According to a source familiar with Paxos, the company was not aware that Binance intended to manually port the token [BUSD] onto other blockchains. When these revelations came to light, the DFS held multiple meetings with the company in January. The source said, ‘I can say with absolutely 100% confidence that … Read more