2008 marked a number of important events in America’s history, including the election of the country’s first African-American president, Barack Obama. Unfortunately, even though this moment was seen as positive for many Americans, a financial crisis was looming on the horizon, leading to the need for reform in the financial industry, the real estate industry and on Wall Street. As part of this reform, the Dodd-Frank Wall Street Reform and Consumer Protection Act, often simply called the Dodd-Frank Act, was enacted.
Although the Dodd-Frank Act invoked the need for major changes in lending practices, it also introduced changes to the ways in which financial institutions comply with regulations involving record keeping. The goal of the Dodd-Frank Act was to not only introduce more transparency into lending practices, but also to ensure that consumers are notified of their rights and obligations. Today, solutions like Nice call recording for the trading industry are commonly used to remain within compliance of these regulations, and other methods may be utilized on a case-by-case basis.
What Does Dodd-Frank Require?
As a basic requirement, financial companies under the Dodd-Frank Act are required to record telephone and other communications. Communications, including phone calls and emails, must be retained for a period of at least five years. They must also be time-stamped. Financial companies utilizing older archival methods have typically needed to update to newer systems using solutions from Nice software and other vendors.
Both NICE call recording and NICE VoIP call recording can capture communications using time stamps to comply with Dodd-Frank regulations. While Nice call recording and Nice VoIP call recording are solutions for compliance concerns, each business is unique. If you are in charge of compliance at your financial business, you will need to evaluate how Dodd-Frank or any other compliance legislation or regulation applies directly to your unique situation.
Penalties For Failure To Comply
If a financial company fails to comply with Dodd-Frank’s call recording requirements, the penalties can range from mild to severe. Penalties depend upon several different factors, including prior infractions and the severity of the consequences from failing to comply.
The Securities Act of 1933 is used to administer civil penalties under Dodd-Frank. The Act specifies that offenders who have committed violations can be fined $7,500 per person involved or up to $75,000 per entity or company involved. These penalties are per infraction, meaning a company could potentially receive multiple $75,000 fines in the course of one call that was not recorded depending on the amount of individuals or entities involved.
Thinking About The Future
While Dodd-Frank certainly has implications for financial businesses in the present, it’s a good idea for owners of financial companies to think about the future and how compliance issues may affect profitability down the road.
Perhaps more compliance requirements will be issued in the future based on new types of technology. No one could have foreseen VoIP as a viable solution for everyday communications 20 years ago, yet today, VoIP is used on a daily basis by large financial institutions around the world.
As such, you’re encouraged to work closely with your compliance team to ensure that technology investments in your business are sufficient enough to keep pace. While investing in newer technologies is always a gamble, the trade-off is that you can future-proof your business against possible regulations and restrictions in the future.
Note: The above has been supplied for informational purposes only. No information presented above should be considered legal or business advice. For questions about legal obligations under any United States law, please consult with your attorney.