Dan Ryan is Leader of the Financial Services Advisory Practice at PricewaterhouseCoopers LLP. This post is based on a PwC publication by Mr. Ryan, Sean Joyce, Joseph Nocera, Jeff Lavine, Didier Lavion, and Armen Meyer.
The New York State Department of Financial Services (NYDFS) issued its final rule on June 30, 2016 requiring either senior officers or the board of directors to certify the effectiveness of anti-money laundering (AML) and Office of Foreign Assets Control (OFAC) transaction monitoring and filtering programs. [1] The rule (Part 504 of the NYDFS Superintendent’s Regulations) is a response to weaknesses in transaction monitoring and watch list filtering programs that the NYDFS identified during routine examinations and subsequent investigations over the past several years.
The final rule differs in several critical ways from an earlier version of the rule NYDFS proposed in December of last year. Most notably, the final rule gives financial institutions the option of having a senior officer or the board certify the efficacy of their transaction monitoring and filtering programs; whereas, the proposed rule only allowed senior compliance officers to do so. Also, in light of industry feedback provided during the comment period, the NYDFS softened the tenor of the certification itself by removing the provision stipulating potential “criminal penalties” for incorrect or falsified certification filings.
