Banks struggle on compliance with staff Whatsapp bans as regulators dish out heavy fines

Investment banks are increasingly struggling to get workers to comply with bans on using Whatsapp for business communication, a new survey suggests, after a slew of heavy regulatory penalties.

Nearly two-thirds (65.2 per cent) of compliance professionals found “getting staff to comply” was their biggest challenge with communication channels, according to an industry-wide survey of major financial companies in the UK, US and Europe by tech firm Global Relay.

This figure is up from 61.5 per cent in 2023 and comes as regulators in the UK and US crack down on so-called off-channel communications.

Ofgem slapped Wall Street titan Morgan Stanley with a £5.4m fine last August after its energy traders were caught using Whatsapp to discuss deals.

It came shortly after the Bank of England’s Prudential Regulation Authority censured Wyelands Bank for wide-ranging failings that April, including “poor retention of Whatsapp messages”.

So far, the US has seen the vast majority of enforcement action over private messaging. Since 2021, the Securities and Exchange Commission (SEC) has handed out nearly $2bn (£1.6bn) worth of fines to dozens of banks, including JPMorgan Chase, Goldman Sachs and Wells Fargo, tied to off-channel communications.

Companies have responded by banning Whatsapp, with 43.5 per cent of survey respondents doing this in 2024. However, the proportion is down from 59 per cent in 2023 as just half said an outright ban was an effective way to reduce compliance risk.

More firms (79.1 per cent) are now using communication surveillance technology to monitor bad behaviour as they become increasingly organised in their clampdowns.

Just 7.8 per cent of firms said they did not have a clear plan to tackle off-channel communication, compared with 25.6 per cent last year.

As a result, 31.3 per cent of UK respondents said they were anticipating regulatory action and and taking proactive steps, down 7.2 per cent from last year.

“Asset managers, broker-dealers and investment banks are all grappling with the Whatsapp conundrum,” said Alex Viall, chief strategy officer at Global Relay.

“It’s significant progress that compliance solutions are more road-worthy than during the initial panic when the US SEC and Commodity Futures Trading Commission started their rolling enforcements. Many firms know they ultimately will have to enable this type of communication to stay competitive.”