Big SEC fines for off-channel app messaging shows employee risks


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Tracking risk of employee behaviors–like off-channel messaging–is a part of KYW (Know Your World)

Knowing your customer may be a cornerstone of Risk in Governance, Risk, and Compliance, but KYW—Know Your World—is important, too. That was evident yet again in late September when the SEC announced nearly $2 billion in fines for Wall Street firms that allowed—and sometimes encouraged—their staff to use off-channel messaging apps on their personal phones for work-related messaging. And some managers encouraged their team members to delete messages.

After extensive investigations, the SEC determined that certain institutions were either failing to monitor off-channel messaging or else were openly encouraging it. Federal law related to Compliance requires all work-related communications be a part of record-keeping available for examination.

The SEC has noted that these types of off-channel communications on personal devices can hinder official investigations and regulatory monitoring of activities of financial institutions.

The SEC requires bank employees to conduct work-related communications within official channels, and it requires that records of those communications be maintained and the messaging preserved, according to SEC chairperson Gary Gensler.

While banks have systems in place to preserve in-house emails, employees who leverage messaging technologies on personal devices make monitoring and preservation of messages more difficult. But institutions fined by the SEC in these investigations agreed to review their policies and procedures related to identifying and preserving any work-related messaging on the personal devices of employees.

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