Breaking Down the New York Part 504 Regulation
The New York State Department of Financial Services (NYS DFS) enacted a new AML regulation, Part 504.
In response to the shortcomings identified in transaction monitoring, the NYS DFS, which regulates financial, insurance, and banking industries in New York, ruled that the Banking Division Transaction Monitoring, Filtering Program Requirements and Certifications lacked robust governance, oversight, and accountability in regulated industries.
To remedy the shortcomings the new Part 504 regulation:
Effective January 1, 2017, the NYS DFS is requiring institutions to adopt transaction monitoring and filtering programs which should be based on the company’s risk assessment.
Download the white paper here.
The regulation states that all regulated institutions must have:
TRANSACTION MONITORING PROGRAM
The transaction monitoring program can be manual or automated, but it must be able to detect any and all BSA/AML violations and suspicious activity.
The program should meet the following criteria:
The filtering program may also be manual or automated. The intention is to design the program with the intent of intercepting transactions that are prohibited by the Office of Foreign Asset Control (OFAC). The program must also satisfy the following:
The transaction monitoring and filtering programs must collect data that is relevant to the institution. The relevant data must also comply with the following:
CHANGES TO THE PROGRAMS
Documenting changes to any program within regulatory compliance is important and this regulation is no different. Any time there is a change to the policies or procedures to the transaction monitoring or filtering programs, it must be documented.
ANNUAL BOARD RESOLUTION OR SENIOR OFFICER(S) COMPLIANCE FINDING
Once a year by April 15th, every regulated institution must submit the form, Attachment A, to the Superintendent a Board Resolution or Senior Officer(s) Compliance Finding. All documents pertaining to the regulation must be retained for five years.
If the regulated Institution violates any part of Part 504, the penalties will vary depending on the applicable law.
The regulation is effective as of January 1, 2017, but the institutions have until April 15, 2018 to implement Part 504 and submit the Attachment A form.
Our team, the Capital Compliance Experts, has developed comprehensive solutions to stay ahead of regulatory changes. We offer programs and services that keep you fully compliant and reduce your labor costs.
STEP 1- Risk Assessment
A risk assessment takes an in-depth look at your business and identifies potential risks so you can safeguard your institution from harm.
Our CAMS certified experts have developed a systematic process that will uncover the potential risks that may be involved with your business and the actions you have in place to manage liability.
STEP 2- Automated Transaction Monitoring
Developing your own transaction monitoring and filtering programs can be costly and time consuming. Our Compliance IQ solution is an automated transaction monitoring tool that is not only fully compliant with Part 504 regulation, but will identify high risk activity and dramatically reduce the time it takes to review multiple transactions.
If you would like help complying with Part 504, contact us.