Financial Services Law

Raising the Stakes for AML Compliance Officers: Court Refuses to Rule Out Potential Liability for Role in Employer's BSA Compliance Shortcomings

Why it matters

A federal court judge in Minnesota has rejected the motion of a former chief compliance officer to dismiss the U.S. government's claim that he is liable under the federal Bank Secrecy Act for his employer's failure to comply with applicable BSA requirements. The case arises out of one of the longest-running enforcement sagas in the money services business industry but has implications for AML compliance officers of any entity subject to the AML compliance and recordkeeping and reporting requirements of the BSA. Those implications include not only exposure to substantial civil money penalties for the compliance shortcomings of their employers but also a potential permanent ban on working as AML compliance professionals in any entity subject to the BSA. The ruling was made in a complaint filed in December 2014 by the U.S. Department of Justice on behalf of the U.S. Department of the Treasury (DOT) to enforce a $1 million civil money penalty assessed by FinCEN against Thomas Haider, the chief compliance officer (CCO) for MoneyGram International from 2003 to 2008, for failure to ensure the company implemented and maintained an effective AML program and complied with Suspicious Activity Report (SAR) filing obligations. The complaint also requested an order prohibiting Haider from working—either directly or indirectly—for any financial institution.

The court disagreed with Haider's argument that federal law does not permit the imposition of a penalty for an AML program failure against an individual, ruling instead that "the plain language of the statute provides that a civil penalty may be imposed on corporate officers and employees like Haider." The court also rejected or declined to consider at this time several other arguments made by the defendant, including one related to FinCEN's alleged improper use of grand jury materials and one asserting a violation of his right to due process.

Detailed discussion

One of the longest-running enforcement sagas involving a money services business took another turn early in the new year when a federal judge refused to grant a former MoneyGram chief compliance officer's motion to dismiss a lawsuit filed by the U.S. Department of Justice on behalf of the U.S. Department of the Treasury. The lawsuit sought to enforce the $1 million civil money penalty assessed by the Treasury Department's Financial Crimes Enforcement Network (FinCEN) against Thomas Haider, the CCO of MoneyGram International from 2003 until 2008.

The FinCEN assessment was only the latest (but possibly last) federal action arising out of a Federal Trade Commission investigation that began almost a decade ago into allegedly unfair and deceptive practices of MoneyGram International and fraudulent telemarketing practices in violation of the Telemarketing Sales Rule. In 2009 the company entered into an agreement with the FTC to settle those charges and paid the agency $18 million to provide redress to injured consumers.

A federal criminal investigation followed, and in 2012 the company entered into a deferred prosecution agreement with the Department of Justice, in which the company admitted that it violated the Bank Secrecy Act (BSA) by willfully failing to implement an effective anti-money laundering (AML) program, including among other things appropriate agent due diligence and agent monitoring. MoneyGram agreed to forfeit $100 million, undertake a massive effort to revamp its compliance activities and retain an independent compliance monitor approved by the government.

The December 2014 FinCEN order assessed a $1 million civil monetary penalty against Haider and noted that as the chief compliance officer of MoneyGram from 2003 until 2008 he was responsible for BSA compliance, ensuring that the company implemented maintaining an effective AML program and timely filing SARs with FinCEN. Failures with respect to all of these items were factors cited as contributing to the company's deferred prosecution agreement.

Typically, FinCEN assessments are imposed via consent agreements with the target. However, this did not happen in the Haider case. To enforce the assessment, the U.S. Department of Justice on behalf of FinCEN filed a federal complaint in New York federal court. The DOJ also sought an injunction to prohibit Haider from working with any "financial institution" as defined in the BSA.

Haider then moved to dismiss the complaint, making several arguments, including that the BSA provision that he allegedly violated applies only to entities subject to the law—and not to individuals. The provision, Section 5318(h), of the BSA, which states that "[i]n order to guard against money laundering through financial institutions, each financial institution shall establish anti-money laundering programs …," does not apply to individuals like other sections of the BSA, which include specific requirements on directors and officers.

In response, the government suggested the court first look to the BSA's more general civil liability provision in Section 5321(a)(1), which does provide for individual liability, with only limited exceptions not applicable in this case. Specifically, the provision authorizes the imposition of civil penalties against a "domestic financial institution or nonfinancial trade or business, and a partner, director, officer, or employee of a domestic financial institution or nonfinancial trade or business, willfully violating this subchapter on a regulation prescribed or order issued under this subchapter (except sections 5314 and 5315 of this title or a regulation prescribed under sections 5314 and 5315) …."

U.S. District Court Judge David S. Doty agreed with the DOT's interpretation of the statute.

"Section 5321(a)(1)'s explicit reference to 'partner[s], director[s], officer[s], and employee[s]' demonstrates Congress' intent to subject individuals to liability in connection with a violation of any provision of the BSA or its regulations, excluding the specifically excepted provisions (i.e., Sections 5314 and 5315)." The court said the government could proceed with its case against Haider under Section 5318(h). "Because Section 5318(h) is not listed as one of those exceptions, the plain language of the statute provides that a civil penalty may be imposed on corporate officers and employees like Haider, who was responsible for designing and overseeing MoneyGram's AML program."

Judge Doty was not persuaded by Haider's other argument to dismiss the complaint as insufficient because the government failed to specifically identify the violations that composed the money penalty. The court said analysis of the penalty amount was premature, and Haider should use the discovery period to "fully explore" the basis for the penalty.

Challenging the requested injunctive relief, Haider contended that the effort to ban him from working for financial institutions was time-barred. The defendant pushed for application of the general five-year limitations period that governs actions brought by the United States because the injunction request was penal in nature. The government countered that the relief was remedial rather than punitive and therefore subject to a six-year period.

Considering whether the proposed injunctive relief was penal or equitable in nature, the court punted. The question "requires factual inquiry," Judge Doty wrote, with factors such as the likelihood that Haider will engage in similar misconduct in the future and the collateral consequences of the proposed injunction. He declined to decide the issue, deferring a ruling until he could consult "a well-developed factual record."

Finally, Haider argued that the government's assessment violated his right to procedural due process for reasons such as bias against him given FinCEN's prior work in the MoneyGram matter and his lack of review of the agency's materials in the case against him. The court rejected this argument, saying that the defendant's due process rights have yet to be triggered because he has not yet been deprived of a cognizable right.

Although Haider's property interests are ultimately at stake, the underlying administrative process had not deprived him of any interests—yet. "[T]he assessment procedure is merely the first step in the process," the judge said. "Haider will have a full opportunity to explore the government's case and his defenses in discovery, which will then be followed by a motion for summary judgment, trial, or both. Under these circumstances, the court cannot conclude that there has been a violation of Haider's due process rights."

To read the order in U.S. Department of the Treasury v. Haider, click here.

back to top

Bank Executives, Board Members Hit With SEC Fraud Charges

Why it matters

A group of bank executives and board members were hit with fraud charges by the Securities and Exchange Commission (SEC), with the agency accusing the defendants of engaging in a scheme to mislead investors and bank regulators prior to the bank's failure in 2011. The 11 individuals associated with Superior Bank used straw borrowers, bogus appraisals, and insider deals to prop up the bank's financial condition, the SEC alleged, and the defendants extended, renewed, and rolled over bad loans to avoid impairment and the need to report losses in its financial accounting. The tactics used by the Alabama-based bank were an effort to conceal the extent of its losses as the bank faltered during the financial crisis and resulted in the bank overstating its net income in public filings by about 99 percent for 2009 and 50 percent in 2010, the SEC said. Nine of the defendants reached a deal with the agency, although the former president and a senior vice president are contesting the Florida federal court complaint. The individuals that settled neither admitted nor denied the SEC charges and are permanently banned from serving as officers or directors of a public company, with financial penalties ranging from $100,000 (for outside directors of the bank) up to $250,000 (assigned to the former CEO and chairman of the bank's holding company).

Detailed discussion

For engaging in "widespread and egregious" fraud during the financial crisis, the SEC has filed a federal court complaint against a group of 11 former executives and board members at Superior Bank and its holding company. According to the agency, the Alabama-based bank's high-ranking officers and directors schemed to mislead both bank regulators and investors by painting a rosy picture of the bank's finances when it was in fact faltering and ultimately failed.

"Accurate and fair reporting of loan impairment is of paramount importance for financial institutions during periods of severe financial stress," Andrew J. Ceresney, Director of the SEC's Enforcement Division, said in a statement. "Superior's senior-most officers and certain directors allegedly engaged in a widespread and egregious accounting fraud by concealing significant losses from loan impairments."

Between 2006 and 2011 the defendants engaged in a variety of fraudulent activity to avoid the need to report ever-increasing allowances for loan and lease losses in the bank's financial accounting, the SEC said. In some instances the officers replaced the borrowers of record for a severely delinquent loan with alternative borrowers who were in default on multiple other loans from Superior. Borrowers agreed to the additional loan relationship to avoid foreclosure or collection efforts with the understanding they were not obligated to repay the bank under the new loans.

In other cases the officers and directors permitted the use of appraisals that were several years out of date, the SEC said, routinely overstating the value of the loan properties. Some appraisals called for wholly inaccurate or unviable projected future uses of the properties, while other times the bank made use of conflicted appraisers that were beholden to Superior or the borrower.

The agency alleged that renewals or modifications of severely delinquent loans were routinely approved by the defendants by rolling forward relevant payment dates or funding new loans to the borrower and using the proceeds to pay down the prior loan, in an attempt to make the loan appear current on paper and within Superior's internal systems. The scheme also included non-recourse joint venture agreements with defaulted borrowers and a now deceased outside director of the bank's holding company. The deals helped the loans appear current despite the "near certainty" of falling back into delinquency and default, the SEC said.

Four defendants were additionally charged with orchestrating a separate accounting fraud by failing to appropriately impair more than $250 million in substandard loans that were actively marketed for sale to third parties at less than 50 cents on the dollar. And a trio of the executives knowingly failed to write down to zero a deferred tax asset that the bank holding company was using to offset future income despite their awareness that it would never materialize because of the fraudulent lending schemes and operating losses.

Because of the defendants' activities, Superior Bank overstated its net income in public filings by approximately 99 percent for 2009 and 50 percent for 2010. The bank failed in 2011. The agency's Florida federal court complaint listed counts of fraud, aiding and abetting fraud, circumvention of internal controls and falsified books and records, false statements to accountants, and violation of certificates.

Two of the defendants—the president of the bank's central Florida region and a senior vice president and commercial loan officer—are contesting the federal complaint. The remaining nine defendants agreed to settle, neither admitting nor denying the SEC's charges. Each is permanently barred from serving as an officer or director of a public company.

In addition, each will pay a financial penalty ranging from $250,000 for the former CEO and chairman of the bank's holding company to $200,000 for a former CFO and former market executive down to $150,000 for the former general counsel and $100,000 for outside directors. Three other defendants—a former bank president and CEO, former chief credit officer, and former president—reached bifurcated settlements and will receive their financial penalties from the court at a later date.

To read the complaint in SEC v. Bailey, click here.

back to top

Can New Beneficial Owner Identification Requirement for Cash-Only Real Estate Deals in Miami and New York City Be Avoided if Virtual Currency Is Used?

Why it matters

After years of concern about money laundering through shell corporations, repeated legislative and regulatory efforts to gain more information on beneficial owners of entities involved in various types of financial transactions, and a high-profile series of investigative reports in The New York Times, the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) seems to have adopted a more limited tactic for immediate impact. Beginning March 1, it will require title insurance companies to collect more granular information on "purchasers" and beneficial owners in "cash-only" real estate deals in two jurisdictions: Miami-Dade County in Florida, and Manhattan, one of the five boroughs in New York City. Deploying a pair of Geographic Targeting Orders (GTOs), this additional information must be collected, recorded and reported on an existing Form 8300 (currently used for reporting "cash" transactions over $10,000) for a six-month period beginning March 1, 2016 if the transaction exceeds $3 million in Manhattan and $1 million in Miami-Dade County.

Like the current Form 8300 reporting requirements, these new GTO requirements apply not only to transactions involving U.S. and foreign coin and currency, but also to cashier's checks, certified checks, traveler's checks, and money orders. However, the requirements do not appear to apply if payment is made with a virtual currency.

According to the FinCEN director, her agency may eventually expand the reporting requirements throughout the country. "Having prioritized anti-money laundering protections on real estate transactions involving lending, FinCEN's remaining concern is with money laundering vulnerabilities associated with all-cash real estate transactions," according to the agency.

Following an explosive segment on this week's edition of 60 Minutes looking at the role of lawyers in helping establish shell corporations and structure schemes to disguise the source of illegal funds entering the United States, two key members of the House Financial Services Committee in a bipartisan effort are reportedly preparing to reintroduce this week legislation that would require more transparency in the reporting of beneficial ownership of corporations by both incorporation agents and corporations themselves. This legislation, which has been considered in several other Congresses and even gained the support of the White House, has been highly controversial in the business community. Its prospects in this session are uncertain but, much like FinCEN's decision to issue the GTOs, could gain momentum based on public reaction to the 60 Minutes exposé.

Detailed discussion

FinCEN issued GTOs in early January to require title insurance companies to identify the individuals who directly or indirectly are buying real estate with cash or cash-like instruments in two jurisdictions.

"FinCEN is concerned that all-cash purchases—i.e., those without bank financing—may be conducted by individuals attempting to hide their assets and identity by purchasing residential property through limited liability companies or other opaque structures," the regulator explained. "To enhance availability of information pertinent to mitigating this potential money laundering vulnerability, FinCEN will require certain title insurance companies to identify and report the true 'beneficial owner' behind a legal entity."

Exercising authority under the Bank Secrecy Act, Director Jennifer Shasky Calvery found "reasonable grounds exist for concluding that the additional recordkeeping and reporting requirements … are necessary," ordering title insurance companies to report certain information about the persons involved in transactions for a total purchase price in excess of $1 million in Miami-Dade County, Florida and over $3 million in the Borough of Manhattan, New York.

Addressing a gap in current reporting on real estate transactions, the GTO reporting requirements are triggered by such purchases made without a bank loan or other similar form of external financing, and like the current Form 8300 cover transactions "at least in part, using currency or a cashier's check, a certified check, a traveler's check, or a money order in any form." A transaction using virtual currency would not appear to be subject to the GTO, as virtual currency is not considered by FinCEN to be "currency" or any of the other items considered "cash" for purposes of Form 8300.

Title insurance companies, like any other trade or business, are already required to file a FinCEN Form 8300 on any "cash" transaction over $10,000 with specific information, including the identity of the individual primarily responsible for representing the purchaser. The GTO requires title insurance companies to obtain and record a copy of this individual's driver's license, passport, or other similar identifying documentation and provide it to FinCEN. The biggest change is the requirement to obtain, retain and report similar documentation on any beneficial owner(s), defined as an individual who, directly or indirectly, owns 25 percent or more of the equity interests of the purchaser.

The GTO states that the identity of the purchaser should also be shared, along with data about the transaction, such as the date of closing, the total amount transferred in the form of a monetary instrument, the total purchase price of the transaction, and the address of the real property involved. If the purchaser is a limited liability company, the title insurance company must also provide the name, address, and taxpayer identification number of all members.

All records relating to compliance with the GTOs must be retained for a five-year period. The GTOs will be in effect for 180 days, from March 1, 2016 until August 27, 2016.

"We are seeking to understand the risk that corrupt foreign officials, or transnational criminals, may be using premium U.S. real estate to secretly invest millions in dirty money," Director Calvery said in a statement. "Over the years, our rules have evolved to make the standard mortgage market more transparent and less hospitable to fraud and money laundering. But cash purchases present a more complex gap that we seek to address. These GTOs will produce valuable data that will assist law enforcement and inform our broader efforts to combat money laundering in the real estate sector."

To read the GTO for the Borough of Manhattan, click here.

To read the GTO for Miami-Dade County, click here.

To read the FinCEN press release, click here.

back to top

Banks Should Take Note of FINRA 2016 Examination Priorities

Why it matters

The Financial Industry Regulatory Authority (FINRA), the independent self-regulatory body for the securities industry, has issued its list of examination priorities for 2016. Banks will recognize many, but some others are uncustomary for bank examinations and are worthy of note. Culture, conflicts of interest, and ethics—with a "focus on the frameworks that firms use to develop, communicate, and evaluate conformance to their culture"—along with supervision, risk management, and controls, and liquidity, by conducting a review of contingency funding plans. In addition to these primary areas of focus, FINRA plans to take a look at sales practices, including the treatment of senior and other vulnerable investors as well as excess concentrations, financial and operations controls (with consideration of issues such as internal audits and client onboarding), and market integrity. "FINRA urges compliance staff, supervisors and senior business leaders to consider the broad issues and the targeted topics addressed in this letter," the agency wrote. "Using the information as part of firms' risk management can better protect investors, the markets and firms themselves."

Detailed discussion

FINRA emphasized three areas in its annual Regulatory and Examination Priorities Letter for 2016: culture, conflicts of interest, and ethics; supervision, risk management, and controls; and liquidity.

Defining "firm culture" as "the set of explicit and implicit norms, practices, and expected behaviors that influence how firm executives, supervisors, and employees make and implement decisions in the course of conducting a firm's business," the agency announced its intent to formalize its assessment of culture in 2016, while continuing a focus on conflicts of interest and ethics.

While FINRA does not seek to dictate firm culture, the regulator will assess five indicators: whether control functions are valued within the organization, whether policy or control breaches are tolerated, whether the organization proactively seeks to identify risk and compliance events, whether supervisors are effective role models of firm culture, and whether subcultures (such as a branch office or the investment banking department) that may not conform to overall corporate culture are identified and addressed.

As for conflicts of interest and ethics, firms should take "visible actions" to help mitigate conflicts of interest and promote the fair and ethical treatment of customers, FINRA advised.

Turning to supervision, risk management, and controls, the agency reminded firms that its rules create an obligation "to establish and maintain a system to supervise the activities of their associated persons that is designed to achieve compliance with securities laws and regulations," as well as FINRA rules.

To that end, four areas where the agency has observed repeated concerns will be the subject of focus: management of conflicts of interest, technology, outsourcing, and anti-money laundering (AML). The year 2016 will bring the completion of a targeted examination that launched in 2015 regarding incentive structures and conflicts of interest in connection with firms' retail brokerage business, FINRA noted.

Technology—and firms' supervision and risk management practices related to their technological infrastructure—will be top of mind for the regulator, particularly having observed shortcomings in the management of technology systems. Given the persistence of threats and the need to improve defenses, examiners will also focus on cybersecurity preparedness.

"Firms face risks from unauthorized internal and external access to customer accounts, online trading systems and asset transfer systems, as well as in the management of their vendor relationships," FINRA wrote. Examiners will review firms' approach to cybersecurity risk management, including vendor management, staff training, data loss prevention, and incident response.

AML controls, such as suspicious activity monitoring, continue to be on the top of the list of FINRA's priorities. Firms should routinely test systems and verify the accuracy of data sources to ensure that all types of customer accounts and customer activity—particularly higher-risk accounts and activity—are properly identified and reviewed in a manner designed to detect and report potentially suspicious activity, the agency said, with the rationale for any decisions well-documented.

The areas of interest for the regulator with regard to liquidity include firm funding, with a review of the adequacy of firms' contingency funding plans in light of their business models. Practices ranging from the rigorous evaluation of liquidity needs related to both marketwide and idiosyncratic stresses to continuity plans to ensure sufficient liquidity to weather such stresses will be examined by FINRA. For further guidance, firms should review Regulatory Notice 15-33, the agency suggested.

Other areas of focus for the regulator: sales practices, with an eye on excess concentration and vulnerable populations. Having observed deficiencies in the failure to adequately monitor for excess concentration, FINRA intends to assess firms' policies and processes to govern monitoring of excessive concentrations. As for seniors and other vulnerable investors, the regulator will examine "recommendations regarding higher-cost products that may drive unsuitable recommendations and affect product performance to the detriment of the investor."

While considering firms' financial and operational controls, the agency said it will review internal audit frameworks, policies and controls related to onboarding clients and correspondents (noting shortfalls in the area of onboarding professional clients), and the transmittal of customer funds, having recently brought several enforcement actions in the area. As a final area of focus, FINRA reminded firms about market integrity issues such as market access and audit trail integrity.

Many of the areas identified by FINRA are déjà vu for banks in their examinations—risk management, AML compliance and vendor management and, more recently, cybersecurity and liquidity. However, bank examinations seldom address the "ethics" of a bank or whether supervisors and executives are "effective role models of firm culture." These are concepts worthy of consideration by banks and their boards of directors. Another FINRA emphasis—that securities firms should not use their research analysts to win investment banking business—should be kept in mind as banks consider financial advisors for raising capital or doing M&A.

To read the letter identifying FINRA's 2016 priorities, click here.

back to top

CFPB Orders "Buy Here, Pay Here" Auto Dealer to Pay $800,000 for "Abusive" Financing Schemes

Why it matters

Continuing to keep a close eye on the auto lending industry, the Consumer Financial Protection Bureau (CFPB) ordered a "Buy Here, Pay Here" car dealer to pay $700,000 in restitution to customers, with a $100,000 suspended civil penalty. Herbies Auto Sales engaged in abusive financing schemes, the Bureau alleged, advertising a 9.99% annual percentage rate (APR) without disclosing additional costs, such as a required warranty and a payment reminder device, resulting in a much higher rate than was advertised. These actions triggered the prohibition on unfair, deceptive or abusive acts or practices found in the Dodd-Frank Wall Street Reform and Consumer Protection Act, the agency said, by "luring" consumers into the dealership and keeping them "in the dark" about the true cost of financing their cars. The CFPB agreed to suspend the civil penalty as long as the $700,000 in restitution is paid in full. In addition, Herbies must not misrepresent interest rates, finance charges, or other material facts concerning the financing of a motor vehicle going forward, and must "clearly and prominently" post the purchase price and provide certain information (the actual APR, price of the car, and all finance charges) prior to purchase. The action serves as a reminder that auto lending remains on the Bureau's enforcement radar, following a $48 million action against an indirect auto lender that allegedly engaged in deceptive debt collection practices used to coerce borrowers to make payments on car loans and the addition of the larger participants in the nonbank auto-financing ecosystem to the CFPB's oversight. The order is also significant in that it provides further guidance as to what the CFPB may view as "abusive" under the Dodd-Frank Act, which term the CFPB to date has effectively defined through enforcement actions rather than through the normal issuance of regulations.

Detailed discussion

For allegedly hiding auto finance charges and misleading consumers, the Consumer Financial Protection Bureau (CFPB) ordered Herbies Auto Sales to pay $700,000 in restitution to consumers, with a suspended civil penalty of $100,000.

Located in Greeley, Colorado, Y King S Corp., doing business as Herbies, ran afoul of the Dodd-Frank Wall Street Reform and Consumer Protection Act's prohibition on unfair, deceptive or abusive acts or practices (UDAAP) the Bureau said. The "Buy Here, Pay Here" used car dealer both sells the car and originates the auto loan without selling the loan to a third party.

For the period of 2012 through May 2014, Herbies offered financing to about 1,000 people. But according to the CFPB, the offers—found in marketing materials, showroom window displays, and Truth in Lending Act disclosures—were unlawful. Although the dealer advertised an annual percentage rate (APR) of 9.99%, it failed to disclose other finance charges that the CFPB asserted significantly increased the actual APR, including a $1,650 required warranty and $100 for a required GPS payment reminder device.

This financing scheme tricked consumers into visiting the dealership using false advertising, the Bureau charged, taking advantage of consumers' inability to protect their interests in selecting Herbies' financing and therefore in the CFPB's view constituting an "abusive" practice.

In addition, although the dealer was willing to negotiate prices with cash customers, Herbies refused to negotiate with those paying with credit, the CFPB alleged. The resulting finance charge for credit customers should have been included in the disclosed cost of credit, including the APR, but was not.

Pursuant to the consent order, Herbies will provide $700,000 in restitution to consumers who financed cars with the dealership since January 1, 2012. A civil penalty of $100,000 was suspended by the Bureau pending payment of the redress. Herbies is also required to halt future misrepresentations of any fact material to consumers concerning the financing of any motor vehicle, including interest rates, finance charges, or amounts financed. The purchase price of all automobiles must be "clearly and prominently" posted when auto financing is offered, and Herbies is required to provide a written statement with certain financing information—the actual APR, price of the car, and all finance charges, among other items—to consumers for a signed acknowledgment before or at the time financing is offered.

To read the consent order in In the Matter of Y King S Corp., click here.

back to top

UPDATE re Is New York's Proposal a Harbinger of Things to Come? Certification of BSA/AML Compliance and Personal Liability for Mistaken or False Certification


This announcement comes just days after New York Governor Andrew Cuomo nominated Maria Vullo, another lawyer, to replace Benjamin Lawsky, who resigned as the Superintendent of the Department of Financial Services in mid-2015. Mr. Lawsky may have been the most controversial person ever to hold the top banking regulatory position in New York, establishing his office as a very independent enforcement agency, initiating actions against some of the world's largest banks, collecting billions in civil money penalties and fines, creating the bitlicense for virtual currency companies, and introducing the concept of requiring this Sarbanes-Oxley–type AML/OFAC compliance certification from compliance officers. Many will be watching to see if Ms. Vullo, a seasoned litigator and former state deputy attorney general with seemingly strong credentials in prosecuting consumer protection and fraud cases, picks up where her predecessor left off and endorses this proposal.

The New York Department of Financial Services has extended the public comment period for its highly controversial proposal to require AML and OFAC compliance certifications from the chief compliance officers of New York chartered banks and money transmitters and other money services businesses licensed in New York. An incorrect or false certification could subject the compliance officer to criminal liability. The new comment period now ends on March 31.

Click here to read the original article.

back to top



pursuant to New York DR 2-101(f)

© 2024 Manatt, Phelps & Phillips, LLP.

All rights reserved