The state of New York will not require financial institutions to have their chief compliance officers make an annual certification attesting to their organizations’ compliance with BSA/AML and OFAC monitoring and filtering programs.
Instead, regulators from the state’s Department of Financial Services will require compliance statements from senior officers or the financial institution’s board of directors. That’s a change from the state’s original proposal.
The new AML and sanctions screening recommendations are scheduled to take effect on Jan. 1, 2017. Financial institutions will have to submit their first annual compliance certification on or before April 15, 2018, according to the state agency. The new rules stem from proposals originally issued in December 2015.
Overall, the new rules require banks and other New York financial services companies, including licensed money transmitters, to implement enhanced BSA/AML and OFAC monitoring and reporting requirements. Such enhanced requirements would include monitoring transactions after their execution for potential BSA/AML violations and suspicious activity and preventing transactions prior to their execution when they’re prohibited due to sanctions or applicable watch-list violations.
“Each institution is required to maintain a program ‘reasonably designed’ to monitor transactions for potential BSA/AML violations and suspicious activity reporting,” wrote Michael Volkov of Volkov Law Group in a blog posting. “Such a system must include: (1) periodic reviews and updates to the system based on relevant risks, changes in law or regulatory warnings; and (2) testing of transaction monitoring systems, including a review of governance, data mapping, transaction coding, data input and program output.”
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