The New York State Department of Financial Services (NYDFS) risk based banking rule, went into effect on January 1, 2017 and will have a significant impact on the validation of financial institutions’ transaction monitoring and sanctions filtering systems.  The final rule requires regulated institutions to annually certify that they have taken the necessary steps to ensure compliance. 

Data integrity is particularly interesting because it arguably hasn’t been given the same emphasis as other components of an effective anti-money laundering (AML) program, such as a risk assessment. 

There has always been an interesting dynamic between the way compliance and technology departments interact with one another.  This new rule will force institutions to trace the end-to-end flow of data into their compliance monitoring systems which could be a painful exercise.  This exercise will demand the interaction between groups which may have stayed isolated in the past and it will require some parts of the organization to ask tough and uncomfortable questions to others.  Clearly, gaps will be found and remediation projects will have to be launched to address those items.