We all recognize, I hope, that honoring faxed wire transfer requests presents some added risks for losses when account takeovers and similar scams get involved. So what follows assumes that your institution has assessed that risk and taken whatever steps you deemed necessary to mitigate or control it.

I've fielded a number of questions relating to the Remittance Transfer Rule and fax requests. In researching the rule to respond to those questions, I was surprised to discover that the word "fax" never appears, and the word "facsimile" appears only once in all of the Federal Register documents issued in connection with the rule. And that single mention only involves the Federal Reserve Board's providing a FAX number for sending comments on its original (5/23/2011) proposal for the rule.

I contacted the Bureau this week by email, and received a telephone call Thursday morning from a very helpful member of the Bureau's staff, who offered unofficial guidance on how faxes might be handled, prefaced with the obligatory disclaimer about it being unofficial and not a substitute for the rule and commentary themselves.

One way, of course, is to treat a fax requesting what would be a Remittance Transfer as a trigger for a telephone call to the consumer during which the transaction is completely conducted under the special disclosure provisions allowed for telephone-conducted transactions.

The other way is to engage in a series of fax transmissions back and forth with the consumer, something like this --

1. Consumer sends fax requesting the remittance transfer, identifying the recipient, location, amount and currency for receipt of the transfer.
2. Institution sends fax to consumer that includes the prepayment disclosure as required by the regulation plus instructions to fax back acknowledgment of the disclosure, approval of the terms, and funding authorization (credit/debit card information or authorization to charge the consumer's account with the institution).
3. Consumer faxes back the approval and payment authorization.
4. Institution faxes back the receipt, with references to the cancellation rights and error resolution as required.
[steps 2 through 4 can be altered to involve a combined prepayment/receipt disclosure as permitted in the regulation]

Using this exchange of faxes considers the faxes to be written documents. Take care that you adhere to the format, grouping and segregation requirements of 1005.31(c).

Thank you John.

Thank you John. This raises another question. If We do not consider fax to be secure enough from the perspective of securing NPPI, do you think it would be acceptable to conduct the same sequence via email if it complied with the consent requirements of esign?

The initial stages of the exchange can be done via email without E-SIGN (through the prepayment disclosure). But to make an electronic (emailed) Receipt legal, E_SIGN will have to be taken care of in one of the steps preceding delivery of the Receipt.