Report indicates HSBC imposes restriction on texting functionality on corporate phones
HSBC and Other Major Banks Crack Down on Recordkeeping Violations
In a bid to remain compliant with financial regulations, HSBC has announced that it will be disabling texting capabilities on company-issued phones. This move comes after the bank found itself in regulatory trouble earlier this year over unmonitored use of unauthorized messaging apps, leading to recordkeeping violations.
Claire Garrett, head of the financial institutions practice at Marsh, has emphasized the importance of staying up to date with the new exposures that come with the evolution of work methods. She stated that firms need to make sure they are up to speed with these changes to avoid regulatory penalties.
Matthew Nunan, a former head of conduct risk for Europe, the Middle East and Africa at Morgan Stanley, echoed Garrett's sentiments, stating that regulators would expect client calls held over platforms like Microsoft Teams to be captured. He also mentioned that the issue is the ability of firms to record, retain, and produce relevant business records, however they are made.
The Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) fined HSBC a total of $45 million for these violations. JPMorgan Chase struck a $200 million settlement with the SEC and CFTC in December 2021 over similar issues. Eleven banks and brokerages, including Bank of America, Citi, Goldman Sachs, Morgan Stanley, and Wells Fargo, paid a combined $1.8 billion to settle recordkeeping violations in September 2022.
Regulatory scrutiny is expanding to include recordkeeping failures related to conferencing technology. Two major global banks known to record Zoom conference calls are JPMorgan Chase and Goldman Sachs. At least two major global banks are now recording Zoom calls, according to sources. Firms are taking steps to record Zoom calls to comply with regulations.
HSBC workers will still be allowed to text from their work phones in a small number of cases where texts are archived. However, work phones will be unable to send or receive text messages. Personal devices are not included in the ban on texting.
The SEC and CFTC have brought two waves of recordkeeping settlements in recent months. In August, they fined 11 firms for recordkeeping violations, and in the following month, they fined Interactive Brokers. Regulators are expressing concern about potential future penalties related to recordkeeping failures on Zoom and other conferencing technology.
The need for firms to ensure compliance with regulations in their use of conferencing technology is becoming increasingly important. There is a need for firms to purchase licensing rights for conferencing technology to ensure compliance with regulations. CFTC Commissioner Christy Goldsmith Romero stated that it's time for Wall Street to establish a culture of compliance over evasion.
In conclusion, HSBC's decision to disable texting on work phones is part of a larger trend among global banks to ensure compliance with financial regulations in their use of modern work methods and conferencing technology. As regulatory scrutiny in this area continues to increase, it is likely that more banks will follow suit.
