Banks falling behind on messaging app scrutiny, survey finds
Reuters
Published Apr 17, 2024 13:03
By Sinead Cruise
LONDON (Reuters) - Global financial companies are falling behind on the monitoring and archiving of all business-related communications using personal messaging apps, a survey released on Wednesday showed, potentially running the risk of regulatory breaches and fines.
THE DETAILS
The Annual Compliance Health Check by data compliance firm SteelEye found 63% of some 400 compliance executives in the U.S., Europe and Asia Pacific said they were not monitoring staff usage of WhatsApp for compliance purposes.
Just 27% said they were investing in communications surveillance capabilities. More than a third said turbulent geopolitics and higher-for-longer interest rates had led to the scrapping of technology projects to support compliance.
CONTEXT
The U.S. Securities and Exchange Commission (SEC) kicked off a sector-wide crackdown on business-related text messages over personal messaging platforms in the wake of the COVID-19 pandemic, amid concerns texts were going unrecorded.
Some of the world's largest banks including JP Morgan, Morgan Stanley (NYSE:MS), UBS, Goldman Sachs (NYSE:GS) and Citigroup have been fined hundreds of millions of dollars after admitting compliance failures in this respect.
WHY IT IS IMPORTANT
Total financial penalties linked to record-keeping missteps across personal messaging tools exceeds $2 billion, SteelEye said.
While U.S. regulators have led the charge against firms failing to meet tough rules on record-keeping, SteelEye said other global watchdogs were applying a "no-nonsense approach".
Fresh fines would ramp up costs for banks already struggling to keep spiralling expenses in check.
KEY QUOTE
"To fail to monitor messaging applications being used by your staff is to wilfully turn a blind eye to potential wrongdoing and open yourself up to significant costs in the form of fines," SteelEye CEO Matt Smith said.
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Written By: Reuters
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