Especially during the pandemic, the use of private communication services at banks has increased significantly.
(Photo: dpa)
new York Using WhatsApp and personal email accounts for business purposes could become very expensive for the big Wall Street banks. Institutions such as Bank of America, Citigroup, Goldman Sachs, Morgan Stanley, Barclays and Deutsche Bank are about to reach an agreement with the US Securities and Exchange Commission and the derivatives regulator CFTC, as reported by the Wall Street Journal. As a result, fines of up to 200 million US dollars each are in the room.
Jefferies Financial and Japanese bank Nomura also approached an agreement, albeit with significantly smaller payments. The authorities planned to announce the settlements by the end of September. A spokesman for Deutsche Bank declined to comment. The SEC and CFTC could not be reached for comment over the weekend.
This is the end of a large-scale investigation that has kept regulators busy for months. SEC and CFTC rules require financial institutions to archive and monitor the written communications of their employees. This is to ensure that compliance regulations are observed. However, WhatsApp and other messenger services such as Signal allow messages to be deleted after they have been read.
Especially during the pandemic, when most Wall Street employees were working from home, the use of private communication services would have increased significantly, as SEC boss Gary Gensler pointed out months ago.
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In addition to concerns about compliance violations, the authorities also fear possible security gaps that could arise through the mixing of business and private apps as well as business and private devices and give hackers access to sensitive systems.
Industry experts suspect that the penalties could also be particularly high so that they have a deterrent effect. Payments over $100 million have been a rarity in recent years.
JP Morgan Chase: Payment of 200 million dollars
America’s largest bank, JP Morgan Chase, agreed to a $200 million fine in an out-of-court settlement in December. According to the SEC, more than 100 employees across all ranks communicated via WhatsApp. Tens of thousands of messages were not properly archived.
The SEC is also set to investigate whether money managers have broken the rules to a similar degree, the report said.
The German financial regulator Bafin is also investigating WhatsApp use by Deutsche Bank employees. According to insiders, managers of the bank and its fund subsidiary DWS have regularly communicated outside of the official channels in the past.
Deutsche Bank and other institutions, meanwhile, have introduced new technologies to better monitor their employees’ communications via WhatsApp and other services. According to industry experts, the Movius app, which is also used by some employees of Deutsche Bank in the USA, is popular. According to its own statements, it archives messages in order to meet compliance standards.
More: Deutsche Bank moves away from key targets for 2022