In 2021, the U.S. Securities and Exchange Commission (SEC) began probing the use of personal devices for record-keeping by large banks across the nation. Bank disclosures have recently indicated that the Commodities Futures Trading Commission (CFTC) was also investigating the same issue. Employees have been using messaging services such as WhatsApp, which has reportedly been used the most as it is convenient to use, as well as iMessage, Facebook Messenger, WeChat, Telegram, and Signal, to keep records.

Reuters was first to report on this issue in 2021. Gary Gensler, the SEC Chair has been instrumental in putting penalties on these banks and enforcing the same. The hybrid work culture and the ease of use have been reasons why employees switched to these messaging apps to keep records, as the work-from-home culture boomed during the pandemic.

According to a report in Reuters, recent disclosures show that major banks and financial institutions have already paid or are expected to pay the following fines to the SEC and CFTC:

JP Morgan Chase & Co.–$200 million
Morgan Stanley–$200 million
Bank of America–$200 million
Citi–amount unspecified but reportedly kept aside amounts similar to other banks
Goldman Sachs–in advanced discussions to resolve the probe
Barclays. PLC–$200 million
Credit Suisse Group AG–$200 million
Deutsche Bank–165 million euros
UBS Group AG–investigations are ongoing.

Although there is simplicity and convenience in using such devices, banks have to keep a record of business-related communications of its employees as per rules of the regulatory bodies. These records are necessary to tackle several types of misconduct some of which include insider trading, market manipulation as well as fraud.

According to a feature in ComputerWorld, financial institutions can outright bar the use of such apps by their employees but it would be difficult to monitor this ban as the hybrid culture has taken root in the banking system.

Alternatively banks can provide a separate corporate version of messaging apps such as WhatsApp. Data can also be captured from instant messaging apps. There are also authorized tools including chat functionality in collaboration platforms some of which include Microsoft Teams and Slack or video platforms such as Zoom, or Thompson Reuters Eikon terminals as well as the chat functionality within Bloomberg.

Whatever means a banking company might choose to deploy, it seems as if the hybrid model is here to stay. The new chair Gensler is cleaning up and enforcing regulations to prevent misconduct. Banks need to clean up their communication channels so that customers can use channels that they are familiar with while regulatory bodies can rest assured that employees are not breaking rules and regulations as they continue to use messaging platforms for simplicity and convenience.  

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