5 US investment banks face $1bn in fines

5 US investment banks face $1bn in fines

Five US investment bank giants are reportedly faced with $1bn in fines for failing to monitor employees using unauthorised messaging apps.

Morgan Stanley and JP Morgan both expect to pay a $200m fine, as authorities use this figure as guideline for the industry, according to a report from Bloomberg. Citigroup has a reserve in line with what the other banks have disclosed.

Bank of America and Goldman Sachs have had advanced discussions with the regulators, with a similar figure set to be paid, the report stated.

As this matter is ongoing and has not been finalised, these figures could change.

Financial institutions are bound by strict communication monitoring rules and with the rise of the pandemic, many have taken to other messaging services which fail to have necessary monitoring tools set up.

In December, the SEC and CFTC imposed $200m in fines on JP Morgan, stating that even managing directors and senior supervisors had skipped regulatory oversight by using WhatsApp or personal email addresses for work-related communication.

The total fine amount could rise. The SEC and CFTC have reached out information from other firms, including HSBC and Deutsche Bank.

Earlier in the year, Deutsche Bank told staff to never delete messages and is issuing new software on corporate phones that archive WhatsApp messages, Bloomberg stated.

A recent report from SteelEye found that just 15% of financial firms are monitoring WhatsApp, despite the rising levels of fines for communication monitoring failings. It surveyed 170 senior compliance professionals and found that just 9% of firms monitor Slack and 3% monitor Signal.

While communication monitoring was better for Microsoft Teams, just 40% of firms capture it, while only 25% of firms capture Zoom.

It added that 76% of financial services firms rank surveillance as one of their two investment priorities for the next 12 months, with 41% focusing on communication surveillance.

Copyright © 2022 FinTech Global

Enjoying the stories?

Subscribe to our daily FinTech newsletter and get the latest industry news & research

Investors

The following investor(s) were tagged in this article.