Today New York Department of Financial Services (“DFS”) Superintendent Adrienne A. Harris released final guidance to New York State banking organizations and non-depository financial institutions licensed or chartered under the New York Banking Law or Financial Services Law (“Covered Entities”) to notify them of the Department’s expectations regarding their review and assessment of the character and fitness of their directors and senior officers, both upon onboarding and on an ongoing basis.  

“New York consumers and businesses should feel confident that their money is being managed by ethical and law-abiding individuals,” said Superintendent Harris. “Entities have a responsibility to assess the character and fitness of executives not just upon hiring, but on an ongoing basis to protect consumers and ensure the safety and soundness of the institution.” 

DFS recognizes that a compromised director, officer, or manager can threaten an organization’s security and dependability at any time during that individual’s service. Thus, a regular and rigorous character and fitness assessment of key personnel is an important tool for regulated institutions to control and mitigate this risk.

The final guidance on Character and Fitness Assessments Reflects that Covered Institutions are expected to: 

• update their policies and procedures to require vetting of Designated Persons at onboarding and on a regular ongoing basis;
• inform the Department promptly if, through character and fitness reviews, they determine that a previously vetted Designated Person is no longer fit to perform their current function;
• vet each Designated Person at the time that they become a Designated Person, regardless of whether the individual is currently or was previously a Designated Person at another Covered Institution; and 
• define indicators that warrant additional scrutiny; for example, if the individual held a senior position at an institution subject to a regulatory action or proceeding, including an enforcement action, receivership, or conservatorship.

A copy of the Guidance On Vetting Key Personnel For State-Chartered Banks And Non-Depository Institutions can be found on the DFS website.

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