WASHINGTON — New York Governor Andrew Cuomo proposed a requirement on Tuesday that could put bank compliance officers on the hook if a bank's anti-money-laundering system fails to meet state standards.
The head of a bank's compliance program would have to certify that the institution's systems function properly and meet state requirements, as well as ensure both that the employees or consultants who are involved with the systems are qualified and that ongoing training is provided to "all stakeholders."
Many in the compliance industry had initially expressed concern over the concept, which is modeled after the Sarbanes-Oxley Act, when it was first broached by Benjamin Lawsky, who used to head the New York State Department of Financial Services. But in the wake of the November terrorist attacks in Paris pressure has been building further to block terrorism financing.
"At a time of heightened global security concerns, it is especially vital that banks and regulators do everything they can to stop that flow of illicit funds," Cuomo said in a statement. "Global terrorist networks simply cannot thrive without moving significant amounts of money throughout the world."
The new standards would require that every bank has an automatic or manual monitoring system for identifying and reporting suspicious activity, a filtering system to weed out people or entities on the U.S. Office of Foreign Assets Control list and validate the integrity and quality of the data.
The proposal also says the monitoring and filtering systems cannot be altered or changed to reduce the amount of alerts that are triggered — something that Lawsky said the DFS found evidence of while he was superintendent.
A bank's chief compliance officer or someone in a similar role would be required to submit certifications each year by April 15. The proposal has a 45-day comment period.