December 07, 2020

RMAG Looks at Whether Payment Controls Changed in the COVID-19 Era


Peter Hohenstein

Peter Hohenstein


There is no doubt that COVID-19 has impacted the way financial institutions are handling payments and payment controls. Functions once performed in the office—be it a bank branch or back office operation—are now often being handled remotely—quite likely on secure laptops in home offices and on dining room tables. 

But when thinking about payment controls, it’s not necessarily about a pandemic. While the coronavirus pandemic is a highly unusual event, the likes of which we hopefully will never see again, disruptions can be caused by a whole lot less. It could be something “as simple as” (comparatively) a hurricane, a tornado, an earthquake—any sort of disruption requiring your organization to move certain functions out of a traditional office environment.

At a recent meeting of the Nacha Risk Management Advisory Group (RMAG), members discussed how payments and payment controls have changed within financial institutions in the COVID-19 era. There’s a lot to think about, some of which your organization has likely looked at, and other items that maybe didn’t come up but perhaps should.

Technology is a key to any operation today and payments are no exception. You probably discovered whether your organization has the IT resources to quickly provide employees with the hardware and software needed to work remotely. But there are deeper dive questions. For example, do employees need to be able to print remotely? Are there reports that were once stored on paper that need to be kept electronically?

With fewer people in the office, electronic signatures are becoming necessary, which comes with their own considerations. Does your organization understand the E-Sign Act and what can and cannot be done with internal documents and client facing documents? Do your clients understand what to do to electronically sign when they can’t be in person to execute documents?

Finally, in terms of payment authentication and controls, does working remotely require changes to your daily and monthly operational procedures? Are there changes to the approval processes for the handling of exceptions that needed to be made? This could even include changes to dollar limits for certain individuals in the approval chain. Are there changes necessary to the separation of duties within certain operational departments?

As we discussed at the RMAG meeting, there’s a lot to think about. For items you haven’t considered, now might be the time. While another pandemic probably isn’t likely in the near-term, you never know when there might be a watermain break outside your office.