Sec. 504.1. Background

The Department of Financial Services (the department) has been involved in investigations into compliance by regulated institutions, as defined below, with applicable Bank Secrecy Act/Anti-Money Laundering laws and regulations (BSA/AML) and Office of Foreign Assets Control of the Treasury Department (OFAC) requirements implementing Federal economic and trade sanctions. As a result of these investigations, the department identified shortcomings in the transaction monitoring and filtering programs of these institutions attributable to a lack of robust governance, oversight, and accountability at senior levels. Based on not only this experience, but also its regular examinations for safety and soundness, along with other factors, the department has reason to believe that financial institutions have shortcomings in their transaction monitoring and filtering programs. As a result, the department has determined to clarify the required attributes of a Transaction Monitoring and Filtering Program and to require that the board of directors or senior officer(s), as applicable, of each regulated institution submit to the superintendent annually a board resolution or compliance finding, as defined in this Part, confirming the steps taken to ascertain compliance by the regulated institution with this Part. This regulation implements these requirements.

Notation

1

With respect to Federal laws and regulations, see 31 U.S.C. § 5311, et seq. and 31 CFR Chapter X. For New York State regulations, see Part 115 (3 NYCRR 115), Part 116 (3 NYCRR 116), Part 416 (3 NYCRR 416) and Part 417 (3 NYCRR 417).

2

31 CFR part 501 et seq.

3

For information regarding the Unites States Code, the Code of Federal Regulations and the Federal Register, see Supervisory Policy G-1.