Banks must re-evaluate risks around communication compliance

Late last year, the SEC announced a US$200mn fine for a global bank that had lapsed in its compliance with regulatory requirements around communications monitoring. This followed a shot across the bow from the FCA, which warned banks and wealth management firms of the perils of skirting compliance for advisors and traders working from home. As regulatory requirements and penalties continue to proliferate, financial institutions are abandoning old methods of maintaining compliance in favour of more technologically advanced approaches.

With the SEC, FCA, and other regulatory bodies imposing multiple fines in recent months around record keeping, compliance teams need to focus on areas of highest risk to ensure that compliance resources are allocated to the correct areas of the business. Effective compliance programmes focus on the underlying risks facing the company rather than on the controls in place to mitigate these risks. As the underlying risks evolve, the focus of compliance shifts to assessing whether the controls are still managing these effectively.

In recent years, global banks have put aside funds in anticipation of action in relation to unauthorised communications practices such as personal account dealing, money laundering, market manipulation, tax evasion, and even activities that weren’t previously within the scope of their ethics policies. And firms’ widening definitions of misconduct, which can now include other risk-evoking scenarios like harassment and discrimination, are creating escalating exposure to penalties and reputational damage.

Monitor new communications channels or face hefty fines

With substantial monetary and reputational damages around record keeping affecting many firms in recent months, improving surveillance efforts is now more essential than ever. Compliance teams should feel encouraged to think big picture about how to improve record retention and surveillance efforts, as well as focus on integrating systems that can record and retain all types of communications such as voice, chat and video.

Additionally, the proliferation of new communication channels, used by regulated employees both in the office and at home, is making misconduct harder to catch. According to a NICE Actimize survey, 60% of firms are not monitoring newer communication channels, including Microsoft Teams, Bloomberg Chat, Zoom and WhatsApp. As a result, firms are getting ensnared in fines as large as US$200mn due to record keeping and surveillance lapses.

In order to ensure compliance across these new forms of communication, firms need to implement modern and resilient compliance recording technology that is able to integrate with surveillance systems to ensure all regulatory obligations are met and conduct risk is minimised. 

But before firms can monitor these new communication channels, they first need to be able to record them. Here, omnichannel compliance recording is essential. 

If firms operated in a world where there were no consequences for misconduct and reckless behaviour, surveillance technology wouldn’t matter. But with fines in the hundreds of millions of dollars, firms are finally realising they need to take a more proactive approach to bolstering their surveillance capabilities.

About the author

Matt Caine is NICE EMEA’s Regional Director of Communications Compliance. Working with NICE for over 10 years on outcomes-based software sales, he has led various teams through transition and a consultative-based business approach. Since 2018, Matt has led the EMEA Communications Compliance business unit in assisting organisations that are subject to regulatory fines by enhancing and optimising their compliance operations across all communications platforms.