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New York - State Conduct Random Audits To Prevent Money Laundering

Published on: February 25, 2015 10:28 PM
By: Reuters
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Benjamin Lawsky, superintendent of the state's Department of Financial Services. AP FILEBenjamin Lawsky, superintendent of the state’s Department of Financial Services. AP FILE

New York - New York may conduct random audits of bank systems designed to combat money laundering because of likely weaknesses in the systems, the state’s chief financial services regulator said on Wednesday.

Benjamin Lawsky, superintendent of the state’s Department of Financial Services, also said that senior bank executives may be required to personally attest that the systems are adequate to detect possible money laundering.

The measures could present additional headaches for financial institutions and their executives, after a number of the world’s largest banks have paid out hundreds of millions of dollars, and even billions, in settlements over lapses in policing transactions from entities under U.S. sanctions.


“We believe there are likely widespread problems with transaction monitoring and filtering systems throughout the industry,” Lawsky said in prepared remarks for a speech on financial regulation at New York’s Columbia Law School.

“Improving those systems is critical to stopping criminal activity, including terrorism,” he said.

Lawsky said the agency expects to move quickly on the random audits and new executive requirements and that he hopes other regulators will take similar steps.

The state agency tested a new approach last year, running transactions through its own system to compare the results to the filters at one bank, which failed to flag millions of suspicious transactions, he said.

Lawsky did not identify the bank in question, but agency spokesman Matthew Anderson said he was referring to Standard Chartered Plc.

The British bank in August agreed to pay $300 million to New York state for not detecting high-risk transactions from Hong Kong and the United Arab Emirates. It also agreed to exit certain high-risk relationships and to suspend certain transactions involving U.S. dollars for high-risk retail business clients in its Hong Kong subsidiary.

The failures were uncovered by a monitor installed at the bank as part of a 2012, $340 million agreement with the state agency over failure to comply with regulations related to U.S. sanctions on Iran

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Read Comments (2)  —  Post Yours »


 Feb 25, 2015 at 11:21 PM Moone Says:

'Terrorism' the new master key to unlock all restrictions on government policing


 Feb 26, 2015 at 07:49 PM charliehall Says:

Reply to #1  
Moone Says:

'Terrorism' the new master key to unlock all restrictions on government policing

Ah, a commenter here who wants Iran and Islamic State to be able to buy more weapons.


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