Wall Street regulator finalizes anti-terror rules
Wall Street declared victory on Thursday after Maria Vullo, the recently appointed head of the Department of Financial Services, finalized anti-terrorism and money-laundering rules that spared top compliance officers from taking the fall for illegal money transfers.
Under Vullo’s rules, which go into effect on Jan. 1, a bank’s board or other senior executives can be held responsible if the company is found to have funded global terrorism, drug cartels or human trafficking.
The new rules can diffuse responsibility among top bank officials. An earlier proposed version mandated the chief compliance officer at the bank would be held responsible.
“They need to do all the things they need to do to stop terrorist financing and money laundering and human trafficking, but I think this is more rational,” John Byrne, executive vice president of the Association of Certified Anti-Money Laundering Specialists, an industry group, told The Post.
“Executive leadership must set the tone of compliance from the top so that the message is disseminated throughout the enterprise,” Richard Loconte, a DFS spokesman, told The Post.
The rules are the first major piece of regulation to come out of the DFS since the state Senate approved Vullo’s appointment on June 15. In a speech the following week, she told Wall Street that she was “no Clint Eastwood.”
“It is time to close the compliance gaps in our financial regulatory framework to shut down money laundering operations and eliminate potential channels that can be exploited by global terrorist networks and other criminal enterprises,” Vullo said in a statement Thursday.
A DFS gained a tough reputation under Ben Lawsky, its previous superintendent, for blockbuster cases — like an $8.9 billion settlement against BNP Paribas for laundering $8.8 billion in trades for state sponsors of terrorism, like Iran and Sudan, from 2004 to 2012.
“Money is the oxygen feeding the fire that is terrorism,” Lawsky said last February at Columbia Law School when he originally unveiled his proposal. “Without moving massive amounts of money around the globe, international terrorism cannot thrive.”