blog | Events Unlocking the Secrets of Instant Messaging for Financial Institutions: Behavox and LeapXpert Seminar Reveals How to Comply with Regulatory Scrutiny and Protect Your Firm فبراير 22, 2023 Fahreen Kurji Share Behavox, in partnership with LeapXpert, held an exclusive seminar in Tokyo on February 16th, 2023, to discuss the importance of instant messaging data storage and monitoring of communications. The seminar was attended by compliance professionals from all major Japanese banks. The seminar addressed the top priorities for Japanese financial institutions and shed light on the importance of compliance in the face of increased regulatory scrutiny of usage of unauthorized communication channels. In the last few years, the use of messaging applications has been on the rise, driven by: An increase in communication channels available to employees A growing adoption of Bring Your Own Device (BYOD) policy initiatives, and The shift towards hybrid workplaces This has led to record-keeping failures for major investment banks operating in the US. As a result, the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have fined 12 major global financial institutions over $2 billion for failing to maintain and preserve electronic communications. Subsequently, SEC and CFTC have expanded their investigations to smaller banks, asset managers, and investment advisers. They have also requested information from firms about their employees’ use of unapproved communication channels for business purposes. Similarly to the US, Japan has regulatory requirements for firms to maintain accurate books and records, so if employees use unauthorized channels to communicate on business matters, the firm will be found non-compliant with their record-keeping requirements. While prohibition doesn’t work, there are ways Japanese firms can respond to the challenge of increased regulatory scrutiny. Seminar attendees agreed that firms need to provide their employees with the necessary tools to communicate in the most efficient ways for them and their clients. Archiving and monitoring must be in place for those communication channels. In addition, governance over approved communication channels is vital. It is essential to identify, catalog, and manage all possible means of communication and have record-keeping and monitoring in place for all of them. Employees must understand that there is zero tolerance for the use of personal communication channels for business purposes. There must be severe consequences for any violations. Firms should monitor for channel hopping and references to unrecorded channels to ensure that communication surveillance is in place to identify references to unrecorded channels or attempts to move conversations to unrecorded channels. This enables firms to hold employees accountable and demonstrate that they have the means to monitor adherence to their policies. The challenges that firms face in implementing these compliance measures include a global footprint and employee resistance. However, it is essential to have a consistent approach across offices, despite different privacy laws. Firms may also face resistance from employees in handing over their personal devices. Depending on contractual language and local employment law, it may be a challenge to force disclosure or take action for non-disclosure. In conclusion, compliance is of utmost importance, and firms must implement a multi-pronged response to tackle increased regulatory scrutiny. Behavox’s upcoming summits in London on February 28 and in New York City on April 6 on AI 101 for Compliance and Security offer an opportunity to learn more about compliance and network with industry experts. Related Readings