NYDFS Part 504 Compliance Guide
The New York Department of Financial Services (NYDFS) Part 504 regulation requires licensed financial institutions to maintain robust transaction monitoring and filtering programs. This guide explains how adverse media screening fits into your Part 504 compliance strategy.
What is NYDFS Part 504?
23 NYCRR Part 504 (effective January 1, 2017) mandates that regulated institutions maintain:
- Transaction Monitoring Programs — Systems to detect suspicious transactions for SAR filing
- Watch List Filtering Programs — Screening against OFAC and other sanctions lists
- End-to-End Model Validation — Documentation and testing of monitoring systems
Non-compliance can result in significant penalties, including fines and enforcement actions from the NYDFS Superintendent.
Key Requirements
| Requirement | Description | How Adverse Media Helps |
|---|---|---|
| §504.3(a) | Transaction Monitoring must be based on the institution's risk assessment | Adverse media data enriches risk profiles with real-world behavioral signals |
| §504.3(b) | Watch List Filtering must cover OFAC, PEP, and other relevant lists | Our API includes PEP and sanctions data cross-referenced with adverse media events |
| §504.4 | Annual certification by the Board or Senior Officer | Audit-ready source citations and risk timelines support certification documentation |
How Adverse Media Screening Supports Part 504
1. Risk-Based Customer Due Diligence (CDD)
Part 504 requires risk-based monitoring. Adverse media screening provides real-time signals about customer behavior that may not appear in traditional watch lists—such as pending investigations, regulatory actions, or civil litigation.
Example Use Case
A customer passes initial OFAC screening but adverse media reveals they are under investigation for wire fraud in Brazil. This triggers enhanced due diligence procedures under your risk-based framework.
2. Ongoing Monitoring
Part 504 requires continuous monitoring, not just onboarding checks. Our API supports webhook-based alerts that notify your compliance team when new adverse media appears on monitored entities.
3. Documentation & Audit Trail
Every risk event returned by our API includes:
- Source URL and publisher
- Publication date
- Risk category classification
- Entity relationships
This data supports the documentation requirements for annual certification under §504.4.
Implementation Checklist
⚠️ Regulatory Note
This guide is for informational purposes only. Consult with your compliance counsel to ensure your specific implementation meets NYDFS requirements.
- ☐ Integrate adverse media API into customer onboarding workflow
- ☐ Configure webhook alerts for ongoing monitoring
- ☐ Map risk categories to your internal risk framework
- ☐ Document API integration in your BSA/AML program
- ☐ Include adverse media data sources in annual Part 504 certification
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