Today the New York State Department of Financial Services (NYDFS) urged banks to adopt blockchain analytics, both for their own crypto activities and to monitor the activities of clients for AML and other risks. However, the announcement also included a reminder that New York state banks have to request approval before launching any crypto or blockchain related products, despite federal banking regulators walking back that requirement.
“As traditional banking institutions expand into virtual currency activities, their compliance functions must adapt, onboarding new tools and technologies to mitigate new and different risks,” said Superintendent Harris. “As a leader in the regulation of virtual currency, DFS will continue to set clear and transparent expectations for institutions, to protect consumers and safeguard market integrity, while also ensuring New York-regulated banking organizations can remain resilient and competitive.”
Any banks planning to engage in crypto activities are expected to use blockchain analytics to screen customer wallets to assess risk exposure, verify the source of funds and counter money laundering risks. The NYDFS previously issued a primer urging the use of blockchain analytics back in 2022.
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