New Rules Loom Over Illicit And Terrorist Financing

In a step to codify and certify the fight against terrorism – specifically efforts to block funding steered to terrorists and money laundering activities – one state is looking to tighten the spigots.

Various sources reported that New York regulators have offered up a proposal to require that banks undertake an annual certification that they have programs in place to stanch those activities. In essence, the Associated Press reported Tuesday, the banks would have to certify that they monitor transactions, filtering them through watch lists.  In more granular detail, the wire reported, the certifications would come from senior level bank executives by an annual April 15 deadline that they have transaction monitoring systems and routines in place that would catch, and alert institutions to, possible violations of the Bank Secrecy Act, uncover money laundering activities and single out suspicious activity in general.

The proposals, which come from Albany, and specifically Gov. Andrew Cuomo’s office, and which come after four years of investigations into various methodologies of financing terrorism, offer up a nod that broad improvements to current practices are needed. The lawmakers said that new efforts are needed to cure deficiencies in transaction monitoring, oversight and employee accountability. In fact, under the just-introduced proposals, any officials who file false, or incorrect information (knowingly) would be subject to criminal prosecution. Speaking more generally, those institutions that violate terms of the proposals would be penalized (and fines levied) while they keep an eye out for, and halt automatically, transactions that are flagged through internal watch lists and other lists that center on “politically exposed” persons.

The proposals would certainly be far reaching, according to the Department of Financial Services, with a push to include a range of institutions that spans state-regulated banks, as well as those branches of foreign banks that operate within New York state, money transmission enterprises and check cashing establishments.

Those proposals dovetail with efforts across the United States that seek to cut off funding that is steered toward the Islamic State. Efforts in that mission have included working through financial reports of various institutions, and destroying oil infrastructure, which in turn takes out at least some of the earnings the group garners from sales of the commodity.

The regulations, which now are subject to a 45-day period of bank public commentary, would then become effective immediately, extending out from fiscal years that would begin in April of 2016.


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