Clifford Chance

NYDFS Flexes Enforcement Muscle In Crypto Markets With $30 Million AML and Cybersecurity Fine and Draft Cybersecurity Amendments

August 23, 2022

On August 1, 2022, the New York Department of Financial Services levied a hefty $30 million penalty on Robinhood Crypto, LLC ("Robinhood Crypto"), citing what the agency identified as persistent and pervasive transaction monitoring and cybersecurity compliance failures. NYDFS also required Robinhood Crypto to retain an independent compliance consultant for 18 months. Although NYDFS has investigated other virtual currency businesses and other New York state authorities have brought significant enforcement actions, the Consent Order marks NYDFS's first cryptocurrency enforcement action containing a monetary penalty and extensive other remedies.

In addition, NYDFS recently released draft amendments to its Cybersecurity Regulation. NYDFS virtual currency business licensees should proactively review these amendments and ensure that their compliance programs are sufficient to ensure compliance.

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