Financial firms are prioritising communications surveillance, but most are still failing to monitor Social Messaging i.e., text and WhatsApp communications, putting themselves at risk of regulatory scrutiny and fines like those levied against Bank of America this week, according to the latest data from RegTech leader SteelEye. SteelEye’s Compliance Health Check report surveyed 170 senior compliance professionals in financial services and found that just 15% of firms are monitoring WhatsApp at all, despite the continued levying of huge fines against those found to be failing to monitor the communications of regulated employees effectively. Even fewer are monitoring Slack (9%) and Signal (3%) – and even considering the more expected channels there remains significant work to be done, with just 40% capturing Microsoft Teams, 40% Bloomberg Chat and 25% Zoom.
These findings may also suggest why 76% of financial services firms now rank surveillance as one of their two investment priorities for the next 12 months, with 41% focusing specifically on communications surveillance as a key priority.
It is unsurprising to see banks’ and US respondents’ prioritisation of communications surveillance, given the fact that regulators are clamping down hard on communications rules. Bank of America and Morgan Stanley have both been fined $200 million each by the Securities and Exchange Commission (SEC) in the past week alone – providing the latest headline-grabbing examples of the importance of adequate monitoring of employee communications.
New channels of communication and ways of working – such as remote and hybrid arrangements driven by COVID – are accelerating the pace of regulatory change. Regulators race to adapt to and incorporate the latest industry innovations, complicating the picture for compliance professionals, and as a result, 20% of firms said that keeping up with regulatory change was their single biggest challenge in meeting their regulatory obligations.
Brian Lynch, president of SteelEye Americas, said: “There remains a lot of work to be done by financial services firms to ensure they do not fall foul of regulatory action. This is a growing challenge for firms and it’s unlikely we’ll see it slow down any time soon, with new channels of communications emerging all the time. It’s encouraging to see firms prioritising communications surveillance and recognising the role technology can play in solving this challenge. Technology and robust data are essential to ensuring future-proofed compliance processes and procedures, and to avoiding unwanted regulatory oversight and damaging fines.”
About the research
The report has surveyed 170 senior compliance decision-makers in financial services across the UK and US. 80 responses were collected using OnePoll between January and April 2022. 90 responses were collected by SteelEye between October and December 2021. All survey responses were anonymous but have been thoroughly vetted to ensure the authenticity of the research. Below are the splits.
Source: SteelEye
