Financial Sector’s No-Action Position = Vulnerability during COVID-19

Social distancing challenges your institution to know your customer (KYC) face-to-face.

The good news is your bank, financial advisory or brokerage will not be fined by the authorities if you don’t record calls between your agents and customers, because your team is working from home and cannot record and save calls.

The bad news is that you are leaving your business and your customers vulnerable – exposed to the very situations that brought about the recording requirements in the first place: financial crimes, such as money laundering, fraud and other illicit activities.

Employees are safer at Home, but is your Institution?

By working safely from home, your employees do not have the standard routines, equipment, oversights and security measures to carry out their responsibilities on behalf of your business and according to your policies – let alone federal regulations.

In recognition, the Commodity Futures Trading Commission (CFTC) issued a No-Action Position notice, waiving its call recording requirements, to promote public safety and enable employees of financial institutions to work from home due to COVID-19.[1]

Similarly, the European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, issued a statement forgiving the call recording requirements, qualifying that “Firms are expected to deploy all possible efforts to ensure that the above measures remain temporary and that recording of telephone conversations is restored as soon as possible.”[2]

Essentially, by protecting worker safety – the obvious priority – the authorities recognize the vulnerabilities they are exposing. But the exposure is not just on the phone lines.

Routine account activities Interrupted

The pandemic has had an impact on millions of people. Many, who received a monthly paycheck have been fired, put on unpaid leave or reduced hours. Their financial activity is no longer based on a budget. Maybe a stimulus check has been deposited. Withdrawals are atypical. Someone borrows money from a family member or pays off a credit card with funds that are not from traditional income.

Then there are court claims against accounts, maybe a bank requesting an unpaid mortgage, a landlord claiming rent, a credit card company enquiring about balances to pay off accumulating debt.

As the virus continues to spread, so do the unconventional transactions, making “irregular and suspicious activity” hard to identify. Clearly, these changes in banking routines may leave openings for fraud and money laundering, as well as difficulty in monitoring these activities. Implementation of due diligence, training and reporting protocols, required by the Bank Secrecy Act (BSA) and related laws and regulations, may be hard to execute.

Add to these disruptions, the fact that social distancing challenges your institution to know your customer (KYC). With more activity online and face-to-face meetings more risky, it is less likely that your neighborhood branch will have the ability to maintain the same level of familiarity with customers – creating a new obstacle to understanding the mutual integrity of the customer-bank/firm relationship.

An Immediate Solution for Mutual Protection

Reveal’s enterprise-grade recording solution may be added-on to financial agencies’ existing recording, analysis and CRM tools and used by employees on their mobile phones, tablets and home computers to record, transcribe, analyze and store data safely in the cloud.

Because it is a plug-and-play solution, Reveal F2F may be rapidly activated, providing the protection for organizations and their customers required by law…and necessary to avert illegal financial activity – both from inside and outside of the bank or firm.

The system is easy to use, with the push of a button to record transactions…and Reveal does the rest: recording, analysis of key words, customer satisfaction evaluation, transcription, and providing actionable insights to assist with follow-up, identifying revenue-generation opportunities, etc.

The system was developed, in fact, to aid businesses with Compliance, Revenue-Generation Intelligence, Bias and Inclusion Management, Training and other operational functions.

[1] No-Action Positions to Facilitate Physical Separation of Registrant Personnel in Response to COVID-19 Pandemic, U.S. Commodity Futures Trading Commission, CFTC Letter No. 20-19 No-Action June 09, 2020.

[2] ESMA Clarifies Position On Call Taping Under MIFID II, European Securities and Markets Authority (ESMA), 20 March 2020.

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Reveal is an enterprise-grade, cloud-based SaaS platform that helps organizations capture essential data and produce relevant business insights from face-to-face (F2F) interactions, providing a comprehensive digital picture of business interactions and transactions.

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