On May 9, NYDFS Superintendent Adrienne A. Harris released proposed guidance for banking organizations and non-depository financial institutions chartered or licensed under the New York Banking Law concerning the Department’s character and fitness assessment expectations. The proposed guidance sets forth several criteria, including that covered institutions (i) update and modernize policies and procedures to ensure designated persons, including senior officers and governing board members, undergo a robust initial vetting process to make sure no new circumstances or conflicts of interests arise that may compromise the organization; (ii) take a risk-based and proportionate approach to ensure their vetting frameworks are tailored to meet their specific business needs, operations, and risks; (iii) promptly inform NYDFS if, through a character and fitness review, a determination is made that a previously vetted designated person is no longer fit to perform the current function, or if a designated person has been transferred to another position or group (or modifications are made to a designated person’s current functions); and (iv) vet each designated person at the time they become a designated person, regardless of whether the person currently is or previously was a designated person at a different covered institution, including in instances involving a merger or acquisition. The announcement noted that a covered institution’s compliance with the guidance will be reviewed as part of its regular examination framework. Comments on the proposed guidance are due June 30.
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