Recent developments about the New York State Department of Financial Services
(Not affiliated with NYDFS; just a blog.)
Want to know what’s on the mind of NYDFS Superintendent Adrienne Harris? Interesting discussion including re: crypto, fintech, the Community Reinvestment Act, and cannabis during her confirmation hearing in the NYS Senate, link here: https://www.nysenate.gov/calendar/meetings/insurance/january-24-2022/insurance-meeting
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
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
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
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
Cyber-enforcement by NYDFS and others is only going to get more intense. I had the good fortune to sit down virtually with journalist Elizabeth Blosfield of the Insurance Journal to discuss ramped up enforcement by NYDFS in cybersecurity on the Insuring Cyber Podcast.
The link to the podcast episode can be found here: https://www.insurancejournal.tv/videos/19537/
Matthew Levine sat down with Scott Moritz to discuss monitorships, lookbacks and independent consultancies on FTI’s podcast “Fraud Eats Strategy. The podcast can be found here:
UPDATE ON NYDFS ENFORCEMENT ACTION VS. ROBINHOOD: There is a deal in principle, according to an amended S-1 filing. Expected penalty is $30MM, and there apparently will be appointment of an independent monitor. Robinhood says NYDFS informed it of alleged violations involving cybersecurity and virtual currency (Part 500 and Part 200) requirements, including deficiencies in policies and procedures regarding risk assessment, lack of an adequate incident response and business continuity plan, and deficiencies in application development security.
A Markets Insider article on the matter can be found here: https://markets.businessinsider.com/news/stocks/robinhood-ipo-30-million-fine-crypto-anti-money-laundering-probe-2021-7