Recent developments about the New York State Department of Financial Services
(Not affiliated with NYDFS; just a blog.)
In 2012, the New York State Department of Financial Services (DFS) made a regulatory splash when it imposed a two-year monitorship on Standard Chartered Bank as part of an enforcement action. One commentator noted that the DFS settlement with Standard Chartered had “upended the regulatory dynamics of the international banking world” with this “staggering” resolution. … Read more
NYDFS Superintendent Adrienne A. Harris interviewed with the Capitol Pressroom Podcast. Here are some hottakes: • NYDFS would have denied FTX’s then-pending application for a BitLicense because the firm engaged in crypto lending which is not permitted under the BitLicense. • Re: cryptocurrency regulation generally: “I can confidently say New Yorkers will fare much better than citizens in … Read more
As noted in Part One of this article [LINK HERE: NYLJ11292022562493 DFSReporting Part One], issuance of the second “Monaco Memo” by the U.S. Department of Justice in October 2022 sparked debate anew about the self-reporting of misconduct by corporations. Settlements between the Justice Department and several large companies since then have brought greater clarity to … Read more
NYDFS Superintendent Adrienne A. Harris told Reuters that she expects more BSA/AML enforcement against cryptocurrency firms: “Crypto firms’ compliance with anti-money laundering rules has also been ‘a big issue,’ she said, one she expects her office will continue focusing on in 2023….”We’ve really been working hard, not just through enforcement, but through examination, and just … Read more
In a filing in New York bankruptcy court, NYDFS objected to Binance’s acquisition of the customer assets of Voyager, which has filed for Chapter 11, saying the acquisition “both furthers [Voyager’s] unlawful unlicensed crypto-currency-related activities in New York and does so to the discriminatory disadvantage of New York consumers.” Some takeaways: • DFS alleges Voyager unlawfully opened … Read more
NYDFS issued an enforcement action against Coinbase Inc., alleging a variety of compliance failures. Some details: – $50MM penalty; $50MM commitment spend on compliance; Continuation of Independent Monitor – “During much of the relevant period, Coinbase’s KYC/CDD program, both as written and as implemented, was immature and inadequate. Coinbase treated customer onboarding requirements as a … Read more
In a joint statement of the FRB, OCC and FDIC, the lead federal banking regulators continued in a posture of wariness towards cryptocurrency: “Based on the agencies’ current understanding and experience to date, the agencies believe that issuing or holding as principal crypto-assets that are issued, stored, or transferred on an open, public, and/or decentralized … Read more
NYDFS has issued new guidance for banks on climate risk. This follows on initial guidance issued for banks on climate risk in 2020. According to DFS: “A Regulated Organization’s board of directors and management are expected to care for the organization’s operational resilience and safety and soundness on an ongoing basis and with respect to … Read more
NYDFS has issued guidance for regulated banks that seek to engage in “virtual currency-related activity.” The guidance requires prior approval based on submission of such items as a business plan, evaluation of risk management, governance structures, and financials. Unsurprisingly, and especially in this environment, consideration of consumer protection is central: “The Department has a particular … Read more
While the jury appears still to be out on what will result in imposition of a new DOJ monitorship under the Monaco Memos, if you breach a DPA — twice — you will get an extension of the Monitorship. DOJ has now extended the Ericsson monitorship arising out of an FCPA prosecution for one year. … Read more