NASAA Series 63Ethical Practices and ObligationsMedium
A registered agent receives an email from a client requesting a withdrawal of $10,000 from their account to be wired to a new bank account that is not on file with the broker-dealer. The client states they recently moved and opened this new account. What is the MOST appropriate action for the agent to take to comply with ethical and regulatory standards?
- ACall the client at a previously validated phone number to verbally confirm the request and new bank details.
- BInform the client that withdrawals can only be sent to existing bank accounts on file.
- CProcess the wire transfer immediately to ensure client satisfaction.
- DEmail the client back, asking for a scanned copy of a voided check from the new account.
Show answer & explanationAnswer & explanation
Correct answer: A. Call the client at a previously validated phone number to verbally confirm the request and new bank details.
Verifying the request through a previously validated communication channel (like a recorded phone number) is crucial to prevent fraud and ensure the client's identity and intent. Relying solely on email or a scanned document is not secure enough for a new, unverified bank account.
Why the other options are wrong
- B. While safer, it might not be the most client-centric or necessary step if proper verification occurs.
- C. Processing immediately without verification is a significant security risk.
- D. A scanned check can be easily faked; it's not sufficient verification.
Client Identity Verification
The process of confirming a client's identity and the authenticity of their requests, especially for sensitive transactions like fund transfers to new destinations, to prevent fraud.
- Crucial for preventing identity theft and unauthorized transactions.
- Requires using reliable, pre-verified contact information.
- New account details always require heightened scrutiny.
Memory trick: Verify the voice, not just the words, when money moves.