New York Governor Andrew Cuomo on Tuesday proposed a new regulation that would require senior executives at financial firms to certify the adequacy of their systems to combat money laundering and terrorist financing.
The proposal is modelled on the U.S. Securities and Exchange Commission’s (SEC) Sarbanes-Oxley rules requiring executives to attest to the quality of their internal controls
“Money is the fuel that feeds the fire of international terrorism,” Cuomo said in a statement. “Global terrorist networks simply cannot thrive without moving significant amounts of money throughout the world. 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.”
Over the last four years, the New York State Department of Financial Services (NYDFS) has conducted investigations into terrorist financing, financial sanctions violations, and money laundering, which have found, among other issues, “serious shortcomings in the transaction monitoring and filtering programs of these institutions and that a lack of robust governance, oversight, and accountability at senior levels of these institutions has contributed to these shortcomings,” NYDFS said in a statement.
The proposed requirement, which is out for a 45-day public comment period, would set minimum standards for firms’ programs to monitor for suspicious transactions. It would also require firms to have a watch list filtering program to prevent transactions involving those under sanctions before they happen (and sets standards for these programs, too.) In addition, chief compliance officers would be required to attest to the adequacy of these programs to regulators each year.
The proposed new requirements would take effect for fiscal years starting on April 1, 2017.