Recent developments about the New York State Department of Financial Services
(Not affiliated with NYDFS; just a blog.)
NYDFS has issued guidance concerning how Virtual Currency Entities handle customer complaints. According to the guidance: • The guidance applies to all “Virtual Currency Entities” (“VCEs”) • The guidance applies to individual customers – not institutions • The guidance requires VCEs to collect relevant data so DFS can assess whether they are resolving customer service requests and complaints … Read more
According to a stipulation filed (1822000-1822445-stipulation) in the BlockFi bankruptcy proceeding in New Jersey: • NYDFS had asserted unliquidated claims for violation of Financial Services Law § 408, one of its omnibus enforcement authorities, and the BitLicense Regulation, 23 N.Y.C.R.R. Part 200 • BlockFi does not appear to have ever obtained a license or charter from NYDFS. That … Read more
NYDFS took action against another insurance firm. According to the DFS allegations: • The benefits of blanket accident and health insurance policies issued to groups including institutions of higher education, day camps and childcare providers were found not bear a reasonable relationship to the premiums paid by these insureds. • The minimum loss ratios maintained by National … Read more
Speaking at the Institute of International Bankers Annual Conference in DC, Superintendent Harris discussed the following: • CHARACTER AND FITNESS FOR BANKING EXECS: Superintendent Harris responded to “the buzz” about this recent DFS guidance, saying it should be unsurprising that regulated banks would want to screen out personnel in sensitive positions with criminal records, dire financial problems, … Read more
According to the DFS allegations (and other public information): • State-owned Industrial and Commercial Bank of China has $22 Billion in assets in the New York branch alone, and over $5 Trillion globally, and is the world’s largest bank by assets according to the WSJ and third largest by capitalization according to Forbes. • ICBC entered into … Read more
• DFS has issued draft guidance that “outlines DFS’s expectations for how insurers develop and manage the integration of external consumer data and information sources (‘ECDIS’), artificial intelligence systems (‘AIS’), and other predictive models to mitigate potential harm to consumers.” • According to DFS: “The use of external consumer data and information sources (‘ECDIS’) and artificial intelligence systems … Read more
NYDFS penalized Genesis Global Trading, a licensee that served primarily as an OTC trading shop, $8MM for cybersecurity, BSA/AML, and Consumer Protection violations. Genesis Global has now surrendered its license, apparently after having ceased trading activity some time ago. According to DFS allegations: • Genesis Global did not conduct an enterprise-wide risk assessment until 2022, despite … Read more
My latest post on the blog for the NYU Program on Corporate Compliance and Enforcement deals with enforcement aspects of the recent amendments to the NYDFS Cybersecurity Regulation, Part 500. These recent amendments to the Cybersecurity Regulation (Part 500) of the New York State Department of Financial Services (NYDFS) are quite expansive in scope.[1] Chief Compliance … Read more
Enforcement takeaways from the Consent Order (per DFS allegations): • After doing a lookback, Payoneer discovered it had engaged in approximately $793,000 worth of transactions with persons or entities in sanctioned countries during the period Iran, Sudan, Syria and individuals on the SDN List between 2013 and 2018 • Payoneer self-disclosed these violations to OFAC, which settled … Read more
In conjunction with its proposed guidance, DFS has significantly trimmed “Greenlisted” coins. It has cut the list to Bitcoin, Ethereum, and several stablecoins. Until recently it had Greenlisted approximately two dozen coins. These changes are part of the Department’s initiative seeking to strengthen DFS oversight of virtual currencies, which include new guidance coin listing and … Read more