IT Compliance Advisor

Dec 9 2015   5:15PM GMT

New York proposes banking rules to block terrorism funding

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The governor of New York has introduced new state banking rules designed to curb money laundering and block terrorism funding. Also in recent GRC news: Most healthcare organizations lack HIPAA-compliant messaging apps; the Fed adopts stricter bailout measures; and a former SEC commissioner says the agency faces a “crisis of confidence” due its controversial use of internal judges.

New York introduces banking rules to stop terrorism funding

andrew cuomo, new york, governor, headshot, imageLast week, New York Gov. Andrew Cuomo (pictured left) proposed rules that would require New York State banks to follow stringent measures designed to prevent money laundering and terrorism funding. Under the proposed rules, banks must have a chief compliance officer (CCO) who would certify that systems that detect and prevent such illicit activity are in place. CCOs who file false certifications will face criminal charges, according to the rules, which are being written by the New York State Department of Financial Services (NYSDFS).
Cuomo’s proposal to prevent militant groups from using the New York financial system comes as the U.S. government and international authorities intensify efforts to thwart terrorism funding to groups such as ISIL in the wake of recent attacks in Paris.

The proposed rules also require improving banks’ systems to monitor and filter illicit transactions, as well as boosting software that automatically block suspicious transactions, according to NYSDFS.

Survey: 92% of health institutions use non-HIPAA-compliant messaging apps

An October survey found that 92% of healthcare institutions currently use mobile messaging apps that are not compliant with the Health Insurance Portability and Accountability Act (HIPAA).

The survey, conducted by mobile provider Infinite Convergence Solutions, garnered responses from 500 professionals in the finance/banking, healthcare, legal and retail industries about their mobile messaging behaviors. The survey further found that more than half of healthcare organizations (51%) do not have an official mobile messaging platform. Of those that did have one, less than a quarter (24%) employed an internal, corporate-created app.

“Healthcare employees communicate inherently sensitive information, like patient prescriptions, medical information, etc., yet their employers do not have the proper mobile messaging security infrastructure in place to adhere to HIPAA or other regulatory requirements,” Anurag Lal, CEO of Infinite Convergence, said in statement.

Fed adopts new rule to rein in emergency lending powers

The Federal Reserve Board last Monday approved a rule that curbs the central bank’s ability to bail out firms during a crisis. The rule was required by the Dodd-Frank Act, which mandates that the Fed limit its emergency lending authority to “broad-based programs” instead of specific institutions. It is meant to assuage concerns by legislators that the Fed holds too much power to pump money into the financial system. Critics say that after the 2008 financial crisis, the Fed used its emergency lending powers for the first time since the Great Depression and operated without adequate restrictions.

Under the adopted rule, the Fed will only be able to use its emergency lending power to help a market or industry sector, and not to bail individual firms out of bankruptcy. The rule requires that at least five firms be eligible for participation in each Federal Reserve lending program, and that each organization has enough collateral to protect taxpayers.

Ex-official says SEC faces ‘crisis of confidence’ over internal judges

The Securities and Exchange Commission defends its practice of bringing cases to its own in-house judges instead of federal court, but a former SEC official disagrees.

Former SEC Commissioner Joseph Grundfest testified before a House Financial Services subcommittee that the agency is undergoing “a crisis of confidence over the fairness of its internal administrative procedures.” The subcommittee, which covers capital markets, recently proposed a bill that would allow defendants to choose a trial by a federal judge or jury instead of before one of the SEC’s internal judges.

In his testimony, Grundfest, now a professor at Stanford Law School, urged the SEC to change its internal policies.

Critics have been challenging the SEC’s increasing use of its in-house court to preside over serious cases such as those involving insider trading. They cite the SEC’s possible “home court advantage” because defendants lack protections that are available in a federal court trial, such as pre-trial discovery rights.

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