By: Maleka Ali
“It comes down to reality and it’s fine with me ‘cause I’ve let it slide” might be lyrics from our favorite Billy Joel song, but to many of us, a New York state of mind is a reality.
Recently, the New York Department of Financial Services (NYDFS) passed a transaction monitoring regulation known as Section 504. Many might say, “I’m not in New York, so this will not affect me.” However, many of the requirements in the final rule are expectations already in place by examiners across the country. What makes this new regulation unique is that the NYDFS will also require an annual certification from each institution it regulates. The growing concern from those not in New York is that this is the first time the examiners’ expectations for model validation have been put to paper in a regulation specifically addressing anti-money laundering (AML) monitoring programs. I predict New York’s ruling will not be isolated, and other states and regulators will quickly follow suit. The new rule will be effective January 1, 2017, and the first annual confirmation of compliance will be due starting April 15, 2018.