Chief compliance officers and senior managers of New York-chartered financial institutions have begun the process of complying with the state's new transaction-screening rule amid persistent concerns that they could be held individually responsible for potential violations.
Amid questions from federal officials and criticism from bank lobbyists, New York regulators issued a final rule Thursday largely scrapping initial plans to hold senior compliance executives legally responsible for compliance lapses.
Federal officials on Monday voiced concerns about New York's plans to finalize a rule that would hold top compliance officers liable for regulatory lapses at their financial institutions.
A New York regulator's plan to hold senior bankers legally responsible for compliance failures conflicts with federal rules and threatens to exacerbate an industry trend to shed risk-fraught accounts wholesale, lobbying groups said.
A New York state proposal to hold bank executives liable for compliance lapses could prove stricter than the federal law that inspired it, and prompt senior-level talent to pursue other careers, say critics.
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