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NY to require personal sign-off of BSA/AML Transaction Monitoring System

Senior officers and boards of directors of banks operating in New York will have a new level of accountability in their BSA/AML and OFAC compliance requirements as of April 15, 2018. One or the other will be required to personally certify in writing that their institution uses a transaction monitoring and filtering system that meets all of the state’s detailed requirements related to BSA/AML Compliance.

New York’s Department of Financial Services (DFS) has published the details of its new regulation regarding BSA/AML and OFAC transaction monitoring and filtering. The most notable change to earlier drafts is Section 504.4: “To ensure compliance with the requirements of this Part, each Regulated Institution shall adopt and submit to the Superintendent a Board Resolution or Senior Officer(s) Compliance Finding…by April 15th of each year. Each Regulated Institution shall maintain for examination by the Department all records, schedules and data supporting adoption of the Board Resolution or Senior Officer(s) Compliance Finding for a period of five years.”

Attachment A to the state’s new BSA/AML Compliance regulation specific to transaction monitoring provides the form that will require either the signature of the senior officer(s) or else the signatures of the board of directors. A senior officer is defined by DFS as “the senior individual or individuals responsible for the management, operations, compliance and/or risk” of the institution.

The document includes the following statements (verbatim) to which the institution’s signer(s) must attest:

“(1) The Board of Directors (or name of Senior Officer(s)) has reviewed documents, reports, certifications and opinions of such officers, employees, representatives, outside vendors and other individuals or entities as necessary to adopt this Board Resolution or Senior Officer Compliance Finding;

(2) The Board of Directors or Senior Officer(s) has taken all steps necessary to confirm that (name of Regulated Institution) has a Transaction Monitoring and Filtering Program that complies with the provisions of Section 504.3; and

(3) To the best of the (Board of Directors) or (name of Senior Officer(s)) knowledge, the Transaction Monitoring and the Filtering Program of (name of Regulated Institution) as of ___________ (date of the Board Resolution or Senior Officer(s) Compliance Finding) for the year ended ________ (year for which Board Resolution or Compliance Finding is provided) complies with Section 504.3.”

Section 504.3 of the new BSA/AML Compliance regulation details point by point the requirements of an adequate Transaction Monitoring and Filtering Program as defined by the New York Department of Financial Services.

Frank Cummings, CEO of AML Partners, said that the certification requirement—either by the board of directors or the compliance officer—is further evidence of the higher and higher stakes of effective BSA/AML Compliance.“This new regulation illustrates the importance of excellent Risk-based Approaches, the close attention to detail required of competent banking personnel, and the critical importance of the best possible BSA/AML software solutions implemented fully,” Cummings said.

He predicts that this type of regulation will help support the work of BSA/AML Compliance officers in regulated institutions: “Starting in April of 2018, top individuals will personally be signing their names to a certification that their institution has an effective transaction monitoring system and they attended to every detail of high quality transaction monitoring in their BSA/AML Compliance program. That kind of accountability is serious business, especially in this day and age.”


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