Asset managers are increasing controls on personal communication apps like WhatsApp as they join banks to ensure staff follows the law when conducting business with clients remotely.
Regulators had previously started to crack down on using unauthorized messaging services to discuss potentially market-moving issues. Still, the situation became more urgent in 2020 when the pandemic required more finance personnel to work remotely.
Following an inquiry that revealed “inadequate data security” during the pandemic, Britain’s Information Commissioner’s Office (ICO), the nation’s top data protection watchdog, demanded a review of the usage of WhatsApp, personal emails, and other messaging applications by government officials.
Since the global financial crisis of 2007–2009, regulations governing financial institutions have become increasingly stricter, and businesses have long logged employee phone calls to and from the office.
This procedure aims to prevent and expose violations like insider trading and “front-running,” or trading on information that has not yet become public. It also ensures optimum customer service practices.
However, since thousands of finance employees and their clients continued to work from home after leaving corporate offices at the onset of the pandemic, some private communications that need to be documented are still at risk of taking place through unauthorized or unapproved channels. Several banks, including Bank of America, Morgan Stanley, and Credit Suisse, have made similar provisions.
Last month, German asset manager DWS announced that it had set aside 12 million euros ($12 million) to cover potential U.S. fines related to investigations into using unapproved devices and record-keeping requirements by its employees.
According to sources at several other investment companies, or what is known as the “buy-side” in the financial community, including Amundi, AXA Investment Management, BNP Paribas Asset Management, and JPMorgan Asset Management, they have implemented tools to ensure that all interactions between employees and clients are compliant.
As reported by a BNPP AM representative, their company has prohibited using WhatsApp for client conversations due to risk, compliance, and regulatory issues, particularly the General Data Protection Regulation (GDPR).
