Example content

Monstrous fines for using WhatsApp seek to make an example of US banks

The news: Some of the biggest US banks face fines of over $1 billion on merchants’ use of private messaging apps like WhatsApp to discuss key business issues.

  • Banks set to pay $200 million each in fines include Bank of America, Barclays, Town, German Bank, Goldman Sachs, Morgan Stanleyand UBS, according the Wall Street Journal, citing people familiar with the matter.
  • Investment banks Jefferies and nomura would face lower fines because of their small size.
  • The fines should be officially announced by the end of September.

WhatsApp Crackdown: The fines result from the Security and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) is investigating bankers’ use of personal messaging apps.

Using encrypted apps like WhatsApp to discuss business has become more common during the pandemic with the rise of flexible working practices. But such communications have come under increased scrutiny from watchdogs because they fall outside official channels and are more difficult for regulators to monitor. They also increase the risk of hackers stealing confidential information.

The big takeaway: The heavy penalties are intended to serve as a deterrent against future regulatory violations. It is extremely difficult to control a potentially large number of merchants using encrypted apps, where message histories can be easily deleted. Thus, the threat of severe financial penalties is one of the most effective control methods available to regulators.

But the threat of hefty fines may not be enough to change a culture where employees are accustomed to using apps like WhatsApp to discuss confidential matters. We expect banks to lobby hard to force staff to limit their communications to official channels. Regulators are likely to issue more fines as they seek to stamp out rule breaches and send a strong message about consequences.

Source link