Why is call recording essential for communications compliance?

Call recordings are a crucial component of the communications compliance picture. Capturing voice communications data allows firms to maintain full oversight of business conversations, satisfy regulatory requirements, and identify misconduct.

But to effectively capture and monitor them, firms must first understand what they are, the regulatory expectations around them, and what controls they must put in place to capture them. 

What are call recordings?

Call recordings refer to the retention of any voice-based conversation, whether it occurs over a mobile or desk phone or on other platforms with voice call functionality that firms use for business communications. To understand which conversations they need to record to maintain a clear view of their communications data, firms must first understand how to define a “call.”

In the past, a “call” might have only been used to describe a conversation that was happening using a telephone or cellular device. Today, the definition has expanded far beyond this and includes channels that might not be initially obvious.

Whether a firm has bring-your-own-device (BYOD) policies that allow employees to use personal phones or issues corporate mobile devices, they must capture recordings of employees’ phone calls if they relate to business Firms must also capture call recordings across cellular or internet-based networks, also known as voice over internet protocol (VoIP).

Modern communications platforms have features that can be used to send a voice message or place voice calls, from instant messaging (IM) channels like WhatsApp and Slack to collaborative platforms like Zoom.

Since traders commonly use turrets to manage multiple phone lines and help execute transactions on the trading floor, firms must also consider these call functionalities and the client interactions that occur over them.

Increasingly, firms have been integrating artificial intelligence (AI) tools into business workflows to assist with call summarization. Since these tools record full meetings to generate call transcripts, compliance teams should consider whether they fall under recordkeeping obligations.

What are the regulatory expectations around call recordings?

General recordkeeping rules require firms to capture any communication relating to business, such as the Financial Industry Regulatory Authority (FINRA)’s Books and Records requirement. However, various regulators have set specific expectations governing voice-related communications and call recordings.

Dodd-Frank Act and Commodity Exchange Act

In the U.S., the Commodity Future Trading Commission (CFTC) has specified that it requires financial institutions to record audio conversations. Under the Dodd-Frank Act, security-based swap dealers are expected to “make and keep records of all oral communications pertaining to pre-execution trade information, including telephone calls.” However, record retention rules “apply only to recordings of telephone calls, i.e., those voluntarily made by the registrant.”

Regulations 1.31 and 1.35 under the CFTC’s Commodity Exchange Act also require futures commission merchants and introducing brokers to keep records of oral communications that lead to a commodity interest transaction. This includes oral communications over “telephone, voicemail, mobile device or other digital or electronic media.”

MiFID II

In both the EU and U.K., the Markets in Financial Instruments Directive II (MiFID II) lays out requirements for voice recording retention. Investment firms are expected to record “calls that have the intention of leading to a transaction” and retain data for five years – even if that transaction is not executed.

The U.K.  incorporated MiFID II requirements into national law and operates under nearly parallel requirements to the EU. U.K.-based firms must record all telephone conversations and keep records of electronic conversations that relate to an order, including those intended to result in transactions.

FAA-N16, SFA 04-N16, and Sheet 283

Other global regulators have issued notices and statements that include expectations on voice capture. For example, the Monetary Authority of Singapore (MAS) issued notices like FAA-N16 and SFA 04-N16, which say that financial advisors and capital market participants should retain voice recordings.

Similarly, the Australian Securities and Investments Commission (ASIC) issued Information Sheet 283, which states that the regulator considers “any written, voice, or electronic communications used by market intermediaries and their representatives” to be a business communication that must be retained.

How can firms capture call recordings?

Solutions that directly capture voice call data and seamlessly transfer it to a secure archive are available, helping organizations enhance risk oversight.

For compliance teams at large firms that may have to rely on “random sampling” to monitor thousands of conversations a day, this is especially transformative. Across the variety of channels that firms use today, voice message data is multiplying exponentially, and the only way to truly manage the data volume is to automate the retention and review of call recordings.

AI-enabled voice capture and monitoring tools automatically generate accurate transcriptions of audio conversations, which firms can archive alongside other electronic communications data.

After consolidating this communications data, firms can implement monitoring solutions to analyze call recordings and flag risks, such as signs of market manipulation or non-financial misconduct like harassment. Ultimately, this enables effective oversight across workflows and helps firms achieve complete communications compliance.