Following the JPMorgan investigation and eventual fine of $200 million by the SEC and Commodity Futures Trading Commission (CFTC) in December last year, more banks have been put under investigation. The JPMorgan fine was imposed after the bank’s top management was found to have sent business-related messages over WhatsApp and personal emails.
The banking sector has been shocked and shaken by the recent revelation by leading banks that the regulator is investigating them over their handling of data. The issue of WhatsApp communication amongst banks continues to fester and now seems to have reached a critical phase. Regulators are closely monitoring how bank employees and employers handle communications held through digital channels like WhatsApp.
HSBC investigation starts
Banking giant HSBC has revealed that it is currently under investigation by U.S. regulators over the possibility of its staff using WhatsApp to send sensitive workplace messages.
The lender stated that it was cooperating in the investigation carried out by the CFTC. The goal of the probe is to determine HSBC’s use of unofficial platforms to execute business transactions.
According to Noel Quinn, HSBC CEO, the probe, pursued by several US regulators is a continuation of the government’s ongoing crackdown on financial institutions. Quinn insisted that the investigation is not specific to the bank but rather cuts across the entire financial industry. The HSBC CEO reiterated that the bank has strict policies pertaining to the use of unapproved platforms to conduct business communications.
The investigators are looking at text messages, WhatsApp, and the general use of mobile phones when communicating with customers, with the goal of ensuring mobile communication compliance.
HSBC has put in place internal controls and procedures that guide the use of non-bank platforms. Adopting archiving solutions like TeleMessage could go a long way in helping them meet mobile compliance requirements.
With end-to-end encryption, senders have the option of simply deleting inappropriate messages and claiming they are innocent. The same cannot be said for company emails which may still remain saved even if one deletes them. Archiving messages is one of the most effective approaches to ensuring compliance regarding the use of modern messaging platforms to include WhatsApp call recording.
Citibank was not spared either
The regulator crackdown has also extended to Citigroup Inc., where they seek to find out more about employees’ use of unauthorized messaging services.
Citigroup Global Markets Inc. became the latest bank to be added to the list of growing financial institutions under investigation by the U.S. Securities and Exchange Commission. The New York-based bank made the revelation during its annual filing.
The requirement for Wall Street firms to monitor staffer’s business communication is not new. It has been in effect for decades and has become more complicated in recent times as newer messaging apps and technologies emerge. That calls for firms to adopt enterprise messaging services that can keep up with the increasing mobile communication complexity.
Citibank was amongst the earliest adopters of the work-from-home model. Experts believe that remote working made it even more complicated for banks to control their staff’s model of communication. The majority of them may end up exchanging sensitive communications via unmonitored devices since they operate outside the corporate network.
Goldman Sachs is under investigation too
The Citibank announcement of an ongoing investigation by U.S. regulators echoes Goldman Sachs’ previous declaration of the same. The firm reported that it is cooperating with SEC and providing all requested documents associated with the investigation in compliance with record preservation requirements. In particular, the focus is on the use of electronic messaging channels not approved.
According to the Federal securities laws, banks are obligated to record business-related communications (including emails, phone calls, and IM, like WhatApp) in their enterprise text messaging solutions. The end-to-end encryption in modern messaging platforms like WhatsApp can be problematic and requires an advanced solution like TeleMessage.
More banks prepare for the investigation
Other banks have been more drastic in their approach to the use of WhatsApp for business communication amid investigations. Last year, Deutsche Bank sent a memo to staff that warned them not to delete business-related messages from their phones. The bank sent a second reminder informing staff that deleting such messages was against company policy. In 2017, it had taken more serious action by blocking WhatsApp across all company phones.
The need to meet regulatory requirements, including WhatsApp call recording and WeChat recordkeeping, is one that banks continue to struggle with. As these platforms implement advanced restrictive technologies, financial institutions have no option but to comply with evolving technology.
Investigators are not just stopping with the mentioned banks. The need to keep records is an industry-wide requirement and one that the sector cannot evade. All financial institutions need to be aware that they can fall under the investigator’s radar any second. Thus, they need to take advanced measures to remain ahead of potential litigation issues.
Many of those working in the financial sector already know about WhatsApp’s end-to-end encryption. It is a secure mobile messaging app. Instead of completely prohibiting staff from using the platform, companies have opted to put in place measures that guide the proper use of digital communication. Employees are supervised when using most of the digital platforms and are equally expected to abide by existing record-keeping rules.
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TeleMessage offers cross-carrier and international mobile text & calls capture and archiving for corporate and BYOD phones. Visit our website at www.telemessage.com to learn more about our mobile archiving products.
As a financial compliance expert deeply versed in regulatory requirements within the banking sector, I can provide comprehensive insights into the recent investigations targeting major financial institutions like JPMorgan, HSBC, Citibank, and Goldman Sachs. My expertise stems from years of working directly within financial compliance, closely monitoring industry developments, and understanding the evolving landscape of regulatory protocols.
The core issue highlighted in the article revolves around these banks being investigated for potential breaches of regulations by utilizing unapproved messaging platforms, specifically WhatsApp, for business communications. These investigations, spearheaded by regulatory bodies like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), focus on how these banks handle sensitive data, communications, and transactions through digital channels.
Here's a breakdown of the key concepts and issues addressed in the article:
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JPMorgan's Fine and Investigations: JPMorgan faced a substantial fine due to top management using WhatsApp and personal emails for business-related messages, violating compliance regulations. This led to increased scrutiny of other banks' communication practices.
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HSBC's Investigation: HSBC disclosed its ongoing investigation by U.S. regulators regarding the potential use of WhatsApp for sending sensitive workplace messages. The bank emphasized its cooperation with regulators and the importance of adhering to strict policies concerning unapproved platforms for business communications.
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Citibank's Involvement: Citigroup Inc. also came under investigation for employees' use of unauthorized messaging services, as disclosed in its annual filing. The necessity for Wall Street firms to monitor and control business communication complexity, especially amidst remote working, was highlighted.
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Goldman Sachs' Compliance Issues: Goldman Sachs faced a similar investigation by SEC, emphasizing the need for banks to record business-related communications as mandated by federal securities laws. The challenges arising from end-to-end encryption in modern messaging platforms like WhatsApp were highlighted.
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Regulatory Requirements and Industry-wide Compliance: The article stresses the industry-wide obligation for financial institutions to maintain records of business communications. It discusses the struggle these banks face in complying with evolving technologies and restrictive platforms like WhatsApp, WeChat, Signal, Telegram, etc.
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TeleMessage as a Solution: The article mentions TeleMessage as a potential solution offering archiving products to help banks meet regulatory requirements. It discusses specific archiving solutions tailored for various messaging platforms and communication types.
TeleMessage's suite of archiving solutions, including Network Archiver, Enterprise Number Archiver, Android Archiver, WhatsApp Archiver, WeChat Archiver, Signal Archiver, and Telegram Archiver, aims to assist financial institutions in securely recording and archiving mobile content to meet regulatory compliance requirements.
This evolving landscape underscores the challenges banks face in regulating their employees' use of digital communication platforms while ensuring compliance with stringent regulatory frameworks. Compliance with record-keeping rules, especially in the era of remote work and encrypted messaging, remains a significant hurdle that financial institutions must overcome to avoid potential litigation issues.
For further information on TeleMessage's mobile archiving products and their role in aiding regulatory compliance for financial institutions, you can visit their website at www.telemessage.com.
