The latest risk alert from CUNA Mutual Group warns credit unions that “significant and wide-ranging” amendments have been made to the model Uniform Commercial Code and recommended for enactment by all states.
The amendments primarily cover transactions involving emerging technologies and digital assets, such as cryptocurrencies, distributed ledger technology, non-fungible tokens (NFTs) and artificial intelligence. However, a less publicized amendment to model UCC 4A (funds transfers) “will be particularly important for credit unions as it allows electronic signatures on wire transfer agreements and request forms,” the alert states.
The approved 2022 amendments to the model UCC can be accessed here, while a general overview of the amendments can be accessed here.
Risk mitigation
The alert states that credit unions should consider the following risk mitigation strategies:
- Delay the use of electronic signatures on wire transfer agreements and request forms until your state legislature has enacted the amendments to the model UCC 4A.
- Require members to request large dollar wires in-person at a branch, or shared branch, where members are more easily authenticated through government issued photo IDs.
- Deploy an identity verification solution in the call center to authenticate members requesting wires by phone. Alternately, credit unions may want to consider a voice biometrics solution (e.g., ID R&D) combined with an inbound phone analytics solution (e.g., Neustar TrustID).
- When transitioning to electronic signatures on wire transfer documents, be sure to deploy an identity verification solution to authenticate members. Electronic signature vendors may offer an identity verification solution.
CUNA Mutual Group’s risk alerts, in addition to additional risk-prevention resources, may be accessed in their Protection Resource Center. Log-in is required.