News

CONCERN INCREASES ABOUT UNFAIR REGULATORY ENFORCEMENT AGAINST INDIVIDUAL COMPLIANCE OFFCERS

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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 ISSUES $100 MILLION PENALTY TO MASHREQBANK FOR OFAC-RELATED COMPLIANCE VIOLATIONS

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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 CREATES CLIMATE RISK DIVISON

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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

 

 

 

 

DOJ RESCINDS PRIOR GUIDANCE ON MONITORSHIPS — NO LONGER DISFAVORED

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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

 

 

 

Governor Hochul Nominates Adrienne A. Harris to be the Next NYDFS Superintendent

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NYDFS WATCH: Governor Hochul has nominated Adrienne Harris, a former economic advisor in the Obama White House and Treasury Department, to be the next NYDFS Superintendent. While the press release does not specify, each of the past two Superintendents became Acting Superintendent while their Senate nomination was pending.

The link to the nomination announcement is here: https://www.governor.ny.gov/news/governor-hochul-announces-nomination-adrienne-harris-superintendent-department-financial

NYDFS Establishes an Office of Financial Inclusion and Empowerment

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Fulfilling a FY 2021 budget initiative, NYDFS today announced establishment of its Office of Financial Inclusion and Empowerment. The office is intended to protect and empower New York consumers and advance economic justice. According to a recent NY Times article, economists believe government support is a crucial element in narrowing the nation’s racial wealth gap. The new office will:


• Maintain a centralized list of financial services counseling providers across housing, student loan, debt and general financial literacy throughout the State.


• Coordinate state and local services aimed at expanding access to credit and opportunities for wealth building.


• Incubate new programs to expand access to safe and affordable banking services, credit and financial education; coordinate public-private partnerships.


• Foster provision of high-quality, low-cost financial products statewide.


Former State Assembly member Tremaine Wright has been appointed as the first Director of this Office.

The press release announcing this can be found here: https://www.dfs.ny.gov/reports_and_publications/press_releases/pr202104131

NYDFS Issues Emergency Order Granting Temporary Relief for Regulated Entities and Persons Affected by COVID-19

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On March 12, 2020 NYDFS issued an “Order Granting Temporary Relief to COVID-19 Affected Regulated Entities and Persons.” This rather extraordinary order specifically acknowledges that “COVID-19 may present compliance challenges” and includes several significant provisions for regulated entities adversely impacted:

● Extends by 45 days the date by which regulated entities or persons must file certifications of compliance with the Cybersecurity Regulations (Part 500) and Transaction Monitoring/Filtering Regulations (Part 504).

● Extends by 45 days the date by which virtual currency licensees must file a Quarterly Financial Statement;

● Facilitates remote workforce activity by specifically acknowledging that individuals conducting “licensable activities from their personal residences” remain subject to the full supervision of the Department and must ensure compliance with required controls, such as for cybersecurity and data protection; and

● Waives the required advance notice where a regulated entity seeks to temporarily relocate an authorized place of business or close a branch office.

The emergency Order may be found here:  https://www.dfs.ny.gov/system/files/documents/2020/03/ea20200312_covid19_relief_order.pdf

Governor Cuomo and NYDFS Issue Extraordinary Orders and Regulations Dealing with Loan Forbearance Due to COVID-19

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The New York Department of Financial Services and Governor Cuomo and have issued two extraordinary orders dealing with loan forbearance to mitigate the impact of COVID-19.

● Executive Order 202.9 declares that any “bank” subject to DFS jurisdiction shall be deemed to be engaged in an “unsafe and unsound business practice” under Banking Law Section 39(2) if it fails to grant a 90-day forbearance to any person or business with financial hardship as a result of the pandemic. This is a broad and apparently unprecedented application of the rarely-used cease and desist authority set forth in Section 39(2). The Executive Order also directs the Superintendent to ensure “any licensed or regulated entities provide to any consumer in [] New York an opportunity for a forbearance of payments for any mortgage for any person or entity facing a financial hardship due to the COVID-19 pandemic.”

● NYDFS issued an emergency regulation implementing this Order, requiring that certain “New York State regulated institutions” provide residential mortgage forbearance on property located in New York, for a period of 90 days, to any individual residing in New York who demonstrates financial hardship as a result of the COVID-19, subject to the usual safety and soundness requirements.

Executive Order 202.9 is here: https://www.governor.ny.gov/sites/default/files/atoms/files/EO_202.9.pdf

The NYDFS emergency regulation can be found here:  https://www.dfs.ny.gov/system/files/documents/2020/03/re_new_pt119_nycrr3_text.pdf

NYDFS Uses New Powers to Investigate Alleged Price Spikes in COVID-19 Medicines, Targeting Non-Licensees

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Continuing its focus on consumer protection enforcement, the New York State Department of Financial Services (“DFS”) announced an investigation into alleged price spikes for six drugs connected to treatments of COVID-19 medical conditions.[1]  According to DFS, its newly-formed Office of Pharmacy Benefits (“OPB”) commenced the investigations under Insurance Law § 111 into what it characterizes as “anomalously large spikes” in the prices of the six drugs, occurring since the onset of the COVID-19 pandemic.  These medications are Ascor, Budesonide, Dexonto, Mytesi, Duramorph and Chloroquine phosphate, each of which has some actual or claimed therapeutic use for COVID-19 conditions. More detail on this investigation can be found on my blog post for the NYU Program on Corporate Compliance and Enforcement, here:

New York State Department of Financial Services (“DFS”) Uses New Powers to Investigate Alleged Price Spikes in COVID-19 Medicines, Where Targeted Pharma Manufacturers Are Not DFS Licensees