1 year ago
60 Morgan Stanley has recently imposed financial penalties of up to $1 million on employees who used messaging platforms such as WhatsApp for company business.
The amounts were determined by factors such as the number of messages sent, seniority, and whether the employees had already received warnings.
“Firms can no longer rely on data silos and legacy systems”
The move further raises awareness of financial firms’ need of monitoring digital communications channels and increased capabilities from the Securities and Exchange Commission to detect failures.
Commenting on that news, Matt Smith, CEO and Co-Founder of compliance technology and data analytics firm SteelEye, said: “The financial services industry faces mounting pressures from regulators, with the crackdown on the unregulated use of e-comms across Wall Street amounting to $2 billion. Morgan Stanley alone faced $200 million in fines due to the lack of regulation of online messaging platforms.
“SteelEye research suggests that despite the continued levying of huge fines against those failing to effectively monitor the communications of regulated employees, most firms are not yet monitoring digital communications channels. Just 15% monitor WhatsApp, and even fewer monitor Slack (9%) or Signal (3%). New communication channels are emerging all the time, complicating the picture for compliance professionals.
“One way to avoid further scrutiny from the SEC is for firms to build a stronger relationship with regulators by being transparent and sharing non-financial risks before they become a problem. It is therefore no surprise that banks are now imposing their own penalties to spare themselves further regulatory fines in the hundreds of millions.
“Regulators are investing in technology that allows them to identify signs of malpractice more accurately, so banks must intervene early and stay ahead of the regulator by looking forward. Firms can no longer rely on data silos and legacy systems when tools that drastically improve the efficiency of surveillance are readily available. Flexible technology and robust data are essential to ensuring future-proofed compliance processes and procedures. The use of integrated surveillance means firms can avoid unwanted regulatory attention by enabling them to self-report and self-remedy more efficiently when malpractice is flagged.”
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