AFC CHALLENGES
Social
media and regulatory compliance
WhatsApp has more than 2 billion users across the globe . That translates to over 100 billion messages a day and over 200 billion minutes on voice and video calls . In recent years , though , its ease of use and universal reach has presented the financial services industry with a significant — and expensive — compliance problem .
The finance industry has used WhatsApp since its arrival in 2009 , first in a personal capacity and then naturally adopting it for business purposes as well . Faced with the familiar issue of compliant record keeping , however , many senior management teams appear to have been in denial about their own accountability for the use of WhatsApp by employees . Their typical defense included organization policies that forbade its use , which resided in a “ gray area ” of unregulated communications commonly used across the financial industry .
Substantial penalties
All of this came to a head in late 2021 when JPMorgan Securities was fined $ 200 million by U . S . regulators . 1 The firm was charged with allowing employees to use WhatsApp and other similar personal messaging platforms and channels to bypass federal laws requiring it to keep detailed records of electronic communications between its executives and their clients .
Then , at the end of 2022 , 16 more financial firms were fined a total of $ 1.8 billion for similar regulatory infringements . 2 The industry was in shock at this latest development , but for many industry experts , this wake-up call was inevitable as the number and volume of unsupervised communication channels have proliferated in the last five years . It is imperative that the market takes remedial action to prevent similar compliance pitfalls in the future .
Rethinking the approach
Traditionally , compliance does not tend to have such a significant impact on an organization ’ s bottom line . But if the penalties handed out by regulators in 2021 and 2022 are indicative of the new reality , financial firms need to fix a problem that is clearly not going away .
In some parts of the industry , the reaction has been for organizations to issue a total ban on using social messaging for both internal and external communication . This shortterm solution is a hard one to enforce and is also a policy that regulators have made clear they do not think is credible . While there are challenges in adopting new technology and implementing policies for its usage , there is precedent for this to be successful , as when the personal and corporate email worlds first collided . Much of the drive for communication is orchestrated by the customer , so in many cases being able to make contact compliantly on any channel or platform is going to offer a huge competitive advantage .
34 acamstoday . org