Today, the New York State Financial Services Department (NYDFS) urged banks to adopt blockchain analysis, both for their own crypto activities and to monitor customer activities for LMA and other risks. However, the announcement has also included a reminder that New York State banks must request approval before launching products related to cryptography or blockchain, despite federal banking regulators that go up this requirement.
“While traditional banking institutions are developing in virtual currency activities, their compliance functions must adapt, to integrate new tools and technologies to mitigate new and different risks,” said Superintendent Harris. “As a leader in virtual currency regulations, the DFS will continue to define clear and transparent expectations for institutions, to protect consumers and protect market integrity, while ensuring that regulated banking organizations in New York can remain resilient and competitive.”
All the banks that plan to engage in crypto activities should use blockchain analysis to filter customer portfolios to assess exposure to risks, check the source of funds and the risk of money laundering. The NYDFS had previously published a primer urging the use of blockchain analysis in 2022.
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