The New York Department of Financial Services (NYDFS) has announced a substantial $40 million settlement with a prominent financial technology company due to serious breaches in its compliance with the Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) regulations. This outcome is a direct result of investigations that uncovered significant deficiencies in the company’s compliance program regarding regulations governing money transmission and virtual currencies.
The agreement mandates that the company engage an independent monitor tasked with thoroughly assessing its compliance efforts and remediation strategies moving forward. This oversight is intended to help ensure the organization establishes a robust compliance framework capable of detecting and preventing illicit activities.
The investigation identified alarming shortcomings within the company’s BSA/AML program, including insufficient customer due diligence practices, failure to implement adequate risk-based control measures to avert money laundering activities, and a lack of effective transaction monitoring. Of particular concern was the company’s handling of high-risk Bitcoin transactions, where numerous transactions with a degree of anonymity were allowed to proceed without adequate scrutiny.
The company’s rapid expansion between 2019 and 2020 exacerbated these compliance issues, leading to a considerable backlog of transaction alerts that remained unaddressed for a prolonged period. This situation created a vulnerable environment, ripe for potential criminal exploitation, raising serious concerns about the integrity of the financial system in New York.
Despite these violations, the department recognized the company’s cooperation throughout the investigative process, along with its commitment to invest resources in addressing the identified deficiencies acknowledged in the consent order.