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NY Moves To Be A 'Laboratory' Of Financial Regulation

AP Photo/Mike Groll

New York's top bank regulator wants to lead the federal government in aggressively cracking down on errant corporations.

Last week the New York Department of Financial Services fined the German Commerzbank $1.4 billion last week, while also requiring the company fire several employees.

"We think New York state can become a real laboratory of democracy when it comes to financial regulation," Ben Lawsky, Superintendent of Financial Services, said last week before University of Albany business students.

In the latest example, Lawsky said his regulators took the novel approach of essentially recreating Commezbank's anti-money laundering system. That system screens transactions to catch red flags. Regulators found that the bank intentionally loosened system filters in order to allow money launderers to get their transactions through.

"We are also considering making some senior responsible executives personally attest the adequacy and robustness of the systems they have," Lawsky said.

Lawsky added that he hopes federal regulators will take the same approach, and that it will would end settlements where corporations pay a fine using stockholder money but then continue wrongdoing.

DFS recently pushed settlements with British bank Barclays and French bank PBP Paribas for billions of dollars and the resignation of employees. 

Charles is senior reporter focusing on special projects. He has won numerous awards including an IRE award, three SPJ Public Service Awards, and a National Murrow. He was also a finalist for the Livingston Award for Young Journalists and Third Coast Director’s Choice Award.
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