Enforcement

ROBINHOOD REVISITED: A KEY TAKEAWAY FROM THE RECENT NYDFS ENFORCEMENT ACTION CONCERNING NYDFS’ VIEW OF ITS JURISDICTION

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The scope of NYDFS jurisdiction is an oft-debated issue for regulated and non-regulated entities alike. To better understand how NYDFS views its jurisdiction and mission, its worth re-reading these findings from its Consent Order against  Robinhood Crypto. “[I]t is worth beginning with the Department’s observation that RHC’s overall approach to its compliance obligations substantially contributed … Read more

NYDFS TAKES $26.3 MILLION ENFORCEMENT ACTION AGAINST JOHN HANCOCK LIFE INSURANCE CO

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NYDFS took an enforcement action against another insurance company, this time John Hancock Life Insurance Company.  According to NYDFS findings, John Hancock prematurely terminated 156 NYS Partnership long term care policies prior to insureds exhausting benefits to which they were entitled, and miscalculated lifetime maximum benefits in cases when insureds used less than the maximum … Read more

CFPB SEEKS TO MUSCLE INTO CYBERSECURITY ENFORCEMENT

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According to a CFPB Circular, the CFPB seeks to further muscle into the cybersecurity enforcement space, and it encourages State AG’s to do so as well, saying:   “Specifically, financial companies are at risk of violating the Consumer Financial Protection Act if they fail to have adequate measures to protect against data security incidents.”   State AG’s … Read more

NYDFS FINES ROBINHOOD CRYPTO $30 MILLION FOR BSA/AML AND CYBERSECURITY VIOLATIONS

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NYDFS has issued its first enforcement action against one of its regulated cryptocurrency entities.  Enforcement takeaways: $30 million penalty is significant. Alleged violations include BSA/AML; Cybersecurity; Reporting; and Consumer Protection. The Department alleged adequate resources were not devoted to RHC’s compliance programs, particularly as it grew, which exacerbated compliance issues. Robinhood improperly certified compliance with … Read more

NYDFS CONTINUES ENFORCEMENT ACTIONS FOR UNLICENSED ACTIVITY — $3.5 MILLION PENALTY AGAINST BANNER LIFE INSURANCE COMPANY

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NYDFS continues its actions against insurance companies for allegations of unlicensed activity occurring in New York.  NYDFS leveled a $3.5 million penalty against Banner Life Insurance Company for unlicensed conduct relating to the pension risk transfer (PRT) business, where companies that carry pension obligations sell them to insurance companies to meet into the future. According … Read more

FDIC HAS BEGUN REGULATORY INVESTIGATIONS OF CRYPTO FIRMS

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THE FDIC has joined the party, commencing investigations and issuing cease and desist letters for what it deems are misrepresentations concerning the applicability of FDIC insurance to the accounts of crypto customers. Other regulatory investigations of recent crypto firm failures include some state banking regulators/AGs. More on this from Coindesk:   https://www.coindesk.com/policy/2022/07/07/fdic-probing-voyager-claims-it-was-insured-by-regulator-report/ https://www.coindesk.com/policy/2022/07/28/crypto-lender-voyager-ordered-by-us-regulators-to-stop-misleading-customers/    

OFAC APPEARS TO BE RAMPING UP ENFORCEMENT IN THE CRYPTO SPACE

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According to reporting from Coindesk, OFAC appears to be ramping up enforcement in the crypto space — mentions of Kraken and Binance. See article here:  https://www.coindesk.com/policy/2022/07/26/kraken-under-investigation-for-alleged-sanctions-violations-report/?utm_source=Sailthru&utm_medium=email&utm_campaign=FIRST%20MOVER%20JULY%2027%202022&utm_term=First%20Mover

NYDFS $5 MILLION CYBERSECURITY ENFORCEMENT ACTION AGAINST CARNIVAL CRUISE LINES

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More cybersecurity enforcement from NYDFS, this time against Carnival Cruise Lines.  Enforcement takeaways: Carnival Cruise Lines paid $5 million and surrendered its license to be an insurance broker in New York.  It had sold life, accident and health insurance to cruise customers. NYDFS alleged “significant” violations, including: Failure to implement multi-factor authentication; Failure to timely … Read more

NYDFS ENFORCMENT ACTION FOR $5.6 MILLION AGAINST NATIONWIDE LIFE INSURANCE CO FOR VIOLATIONS RELATED TO ANNUITY REPLACEMENT

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NYDFS entered into a consent order with Nationwide Life Insurance Company for $5.6 million in penalties and restitution arising from violations alleged to have occurred in connection with the annuity replacement business.  According to NYDFS, “DFS’s investigation found that Nationwide failed to properly disclose to consumers income comparisons and suitability information, causing consumers to exchange … Read more

“NYDFS ROUNDUP: CRYPTO, CYBERSECURITY, AND INSURANCE COMPANIES”: MATTHEW LEVINE PUBLISHES ARTICLE IN NEW YORK LAW JOURNAL

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Matthew Levine published his most recent article on NYDFS titled “NYDFS Roundup:  Crypto, Cybersecurity, and Insurance Companies.”  The article begins: “Change has been a constant at the New York State Department of Financial Services.   Since its first Superintendent departed the agency in June 2015, there have been six confirmed and acting Superintendents for DFS.  With … Read more