Recent developments about the New York State Department of Financial Services
(Not affiliated with NYDFS; just a blog.)
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
State bank supervisors have appointed New York State Department of Financial Services Superintendent Adrienne A. Harris to serve as the state banking representative on the Financial Stability Oversight Council (FSOC), according to the Conference of State Banking Supervisors. “Superintendent Harris’ background and experience at both the federal and state level will be an asset for … Read more
“41 percent of respondents in Compliance Week’s annual ‘Inside the Mind of the CCO’ survey said they don’t believe the DOJ’s CCO certification requirement to be a positive development for the profession,” according to Compliance Week. This report comes at the same time that the OCC is that compliance risk remains “elevated” in its Semiannual … Read more
According to its second report on fair lending violations, NYDFS took action against two mortgage lenders, although it did not make any findings of violations: “After taking the testimony of Premium Mortgage and 1st Priority executives, as well as a number of licensed mortgage loan originators at Premium Mortgage, and reviewing documents provided by the … Read more
NYDFS issued a so-called “Pre-Proposal” for regulation providing for assessments of entities with a BitLicense, pursuant to the New York budget legislation passed in the Spring authorizing these assessments. Cryptocurrency entities chartered by NYDFS as a limited purpose trust charter will continue to be assessed under the regulations issued under the Banking Law. Comments on … Read more
NYDFS entered into another cybersecurity Consent Order, this time with TTEC Healthcare Solutions, Inc. an insurance broker. Cybersecurity actions have become one of the agency’s most common types of enforcement actions. This one carries a $1.9 Million penalty; some takeaways from DFS allegations include: • TTEC failed to implement adequate multi-factor authentication. • TTEC completely failed to … Read more
SELF REPORTING TO NYDFS – ITS NOT YOUR MONACO MEMO (Part One): Pleased that the New York Law Journal has published Part One of my latest article about self-reporting misconduct by financial institutions regulated by the New York State Department of Financial Services (NYDFS). Article is here: http://blogaboutnydfs.com/wp-content/uploads/2022/12/NYLJ11292022562493-DFSReporting-Part-One.pdf
OFAC issued an enforcement action against the U.S.-based crypto exchange Kraken. What is perhaps most striking is how this matter is much more like the run-of-the-mill OFAC enforcement action against a mature financial institution, and not a start up. Key language from OFAC: “This case also demonstrates the value of a company implementing robust remedial … Read more
Is Cryptocurrency at a Regulatory Fork? On the one hand, regulated institutions like Gemini are seeking to mirror practices in traditional financial services, like greater transparency for customers. See https://www.gemini.com/blog/announcing-the-gemini-trust-center-building-trust-through-transparency. On the other, are sentiments expressed by people like Sam Bankman-Fried in his interview with Vox — a must read. Interview here: https://www.vox.com/future-perfect/23462333/sam-bankman-fried-ftx-cryptocurrency-effective-altruism-crypto-bahamas-philanthropy
According to Superintendent Harris, NYDFS will issue additional guidance for cryptocurrency firms. Superintendent Harris via Law360: “We’ll have more to say on capitalization,….You’ll hear more from us on consumer protection, disclosures, advertising … [and] complaints, making sure these companies have an easy way for consumers to complain. . . . Harris indicated that the forthcoming … Read more