NYDFS Issues Enforcement Action Against Goldman Sachs Bank Involving 1MDB Bribery Matter

On October 22, 2020 NYDFS sanctioned Goldman Sachs $150 million as part of a Consent Order. It is part of global resolution with DOJ, Federal Reserve & others concerning highly-publicized FCPA scheme involving proceeds of bonds sold by its international arm. Some takeaways from the DFS findings:
– NYDFS continues focus on the impact of enterprise-wide compliance failures on its NY regulated entity, particularly with shared-service models.
– Banking regulators have for decades treated the “safety and soundness” definition broadly. This also continues.
– “GS Group is primarily responsible for the design, implementation, and execution of an enterprise-wide compliance program for GS Group as well as its subsidiaries,” including NYDFS licensee Goldman Sachs Bank USA.
– “The seamless transfer of information between the central compliance function and subsidiaries is particularly crucial where a subsidiary has its own separate regulatory obligations to report certain compliance concerns to regulators.”
– DFS says Goldman’s failure to investigate, address and report a number of red flags resulted in unsafe and unsound conduct at GSBUSA and the inability by NYDFS to share information that would have been of interest to other NYDFS licensees, including bond purchasers.

The Consent Order may be found here: https://www.dfs.ny.gov/system/files/documents/2020/10/ea20201021_goldman_sachs.pdf

NYDFS Issues Enforcement Action Against NRA for Unlicensed Activity

On November 18, 2020 NYDFS entered into a consent order with the National Rifle Association today settling charges related to the unauthorized marketing of so-called “self-defense” insurance that (according to the agency) also failed to comply with NY law:
– NYDFS filed administrative charges against the NRA this February and the hearing was set for January 2021.
– Settlement requires the NRA to pay a $2.5 million fine and bars it from marketing insurance or receiving compensation for newly issued NY insurance policies for 5 years.
– NYDFS appears to be nearing conclusion of this 3-year investigation. Previously it settled with insurance broker Lockton Affinity, as well as insurance carriers Chubb and Lloyds in connection this matter.
– Total fines imposed in this matter now approximate $16 million.
– Unlike some federal counterparts, NYDFS remains very active in the enforcement realm. Many of us waiting to see whether things change at the federal level under the Biden administration.

The Consent Order may be found here: https://www.dfs.ny.gov/system/files/documents/2020/11/ea20201118_co_nra.pdf

NYDFS Enforcement Action Against AIG Insurance Subsidiary for Unlicensed Activity

NYDFS yesterday announced a settlement with an AIG subsidiary for engaging in the pension risk transfer business in New York without being licensed. The AIG subsidiary will pay a $12 million penalty – substantial for insurance penalties in NY– and transfer the business line to an AIG subsidiary licensed by NYDFS. Hot takes:
– This is the second settlement in an industry-wide investigation. The first was with Athene Holding Ltd. last year, which involved a $45 million penalty.
– The Consent Order notes the agency’s position that each instance of unlicensed solicitation, negotiation, or sale of insurance by an unauthorized insurer or of an improper policy is a separate violation of the Insurance Law. So sending and receiving hundreds or thousands of emails in an unlicensed business can quickly run up the penalty number.
– 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 Consent Order may be found here: https://www.dfs.ny.gov/system/files/documents/2021/01/ea20210201_aig.pdf


NYDFS Issues Its Second Cybersecurity Enforcement Action

NYDFS Cybersecurity Enforcement Action No. 2 — this time from a routine examination. Agency examiners identified significant non-compliance with the Cybersecurity Regulation by a mortgage banker, Residential Mortgage Services Inc.
– An employee handling sensitive customer information fell victim to a phishing scam in 2019
– The company failed to report the breach to NYDFS within 72 hours as required
– Indeed, it only reported it for the first time during an examination in mid-2020
– The company also failed to conduct a “comprehensive” cybersecurity risk assessment in 2019 as required
– Yet its CISO certified in April 2020 that the firm was in full compliance with the regulation
– The company will pay a $1.5 MM penalty and remediate
– Important: the penalty is assessed under the Banking Law for unsafe/unsound conduct — not the Financial Services Law.

Link to the Consent Order can be found here: https://www.dfs.ny.gov/system/files/documents/2021/03/ea20210303_residential_mortgage_0.pdf

A View from the Inside: A Guide to CFPB Investigations

Part I of a two part article I co-authored with with Tony Alexis and Kyle Tayman of Goodwin, Procter & Hoar, LLP concerning how Federal agencies, including the CFPB, are expected to ramp up enforcement under the new administration. I am fortunate to have the opportunity to co-author this article  concerning navigation of CFPB investigations and how they relate to NYDFS investigations. Stay tuned for Part II of the article — NYDFS investigations, coming soon.

Part One of the two part series can be found here:  Alexis_Levine_Tayman_RBFS_Final — Part One


Matthew Levine joined Trish Sullivan of Deutschebank and Chris Boehing of Paul Weiss Rifkind Wharton & Garrison to discuss the new anti-money laundering amendments to the Bank Secrecy Act for theis episode of the International Institute of Banker’s podcast “Bank Talk.”   The podcast can be found here:    


What is a regulator’s favorite snack? Low hanging fruit: the recent Risk Alert from the SEC’s Division of Examinations concerning Suspicious Activity Reporting (SAR) for Broker-Dealers indicates a cornucopia. Some examples found by the Division:
– Firms failing to report as suspicious large deposits of low-priced securities that were immediately followed by liquidation of those positions and wiring out of the proceeds
– Firms failing to report noticeable customer sales of shares occurring simultaneously with explicit promotional activity
– Firms failing to tailor red flags to address risks associated with trading activity commonly engaged in by customers
– For cyber-intrusions, firms failing to include in a SAR known details concerning the nature of the scheme, including theft of assets or funds

Periodic check ups on policies, procedures, governance and systems surrounding SAR reporting are a key means of avoiding the consequences of a deficiency letter or enforcement action.  The alert is here:








NYDFS Issues Enforcement Action Against Industrial Bank of Korea

On April 20, 2020, NYDFS issued an enforcement action against the Industrial Bank of Korea (“IBK”) for violations of New York’s anti-money laundering and recordkeeping obligations.  It is the first of either of these types of BSA/AML enforcement actions issued by the Department in some time; this is not surprising, given that NYDFS, like other regulators, has been consumed with responding to the COVID-19 pandemic. Significant elements of the Consent Order include:

  • a $35 million penalty to be paid to NYDFS;
  • findings by NYDFS that IBK repeatedly failed to improve its BSA/AML program over many examination cycles;
  • the requirement of remediation plans concerning the Bank’s BSA/AML program, suspicious activity reporting, customer due diligence and corporate governance; and
  • two years of quarterly reporting obligations.


More detailed analysis and the Consent Order can be found on my blog post for the NYU Program on Corporate Compliance and Enforcement Blog here:

NYDFS Issues Enforcement Action Against Industrial Bank of Korea


NYDFS Enforcement To Increase Focus on Consumer Protection: ‘Where CFPB Steps Down, DFS Has To Step Up’

Given DFS’ broad powers of supervision and enforcement, NYDFS Superintendent Linda Lacewell has many tools at hand to execute on her policy objective. My article in the New York Law Journal reviews some of the central mechanisms available to the Superintendent for this purpose.




The article can be found here: