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Channel bans
and unclear plans
How are businesses managing electronic communication channels including WhatsApp and WeChat?
Global Relay Industry Insights Report: Compliant Communications 2023 found that, in response to enforcement action from U.S. regulators, 59% of respondents had opted to ban WhatsApp and WeChat. Despite the majority opting for channel bans, 56% said that they did not believe channel bans to be an effective solution.
At the time, only 14 months after the U.S. Securities and Exchange Commission’s (SEC) landmark fine issued to J.P. Morgan Securities LLC, there was an assumption that channel bans were being used as a stop-gap while firms sought to implement tools and systems that would withstand regulatory scrutiny.
In 2024, channel bans continue to prevail as the most common solution for WhatsApp, with 43.5% of respondents continuing to ban WhatsApp for business purposes. Consistent with results in 2023, those who have implemented such bans are uncertain as to whether they are effective.
I am not that surprised that the WhatsApp total ban policy prevails, but think it is interesting that it’s decreasing, which shows there are more technology solutions available after the initial panic as the SEC and CFTC started their rolling enforcement.
My interactions with the market suggest that compliance people know that a ban does not mean the monitored population won’t use unapproved channels. I think many know they ultimately have to enable this type of communication, in a compliant way, as it is a business advantage.
I do think, however, that awareness around the risks and expense of non-compliance, both at a personal but also corporate level, has increased radically since last year. This messaging and policy is coming right from the top – the enforcement actions are having a significant deterrent effect and the attitude that a regulatory fine is just a cost of business is changing. The fact that we’re seeing bonuses reduced where fines are levied on firms, implicitly passing cost onto non-compliant employees, goes to prove this. Bigger fines do focus the mind.
Alex Viall, Chief Strategy Officer, Global Relay
More than two years since the SEC’s first enforcement action in this area, it is unlikely that organizations are continuing to ban WhatsApp as a “quick fix.” Instead, channel bans appear to be in place as a long-term solution, despite questions around their compliance credentials.
Since the publication of last year’s Industry Insights Report, U.S. regulators have continued to issue considerable fines to firms that “did not maintain or preserve the substantial majority of these off-channel communications.” This includes a combined penalty of $289 million to 11 firms in August 2023, where “employees often communicated through various messaging platforms on their personal devices, including iMessage, WhatsApp, and Signal, about the business of their employers.”
It also includes a combined penalty of $79 million issued to 10 firms that failed to capture business messages sent from personal devices in September 2023, and a combined $81 million penalty issued to 16 firms in February 2024.
Despite this continued action, we see firms enacting solutions that they do not believe to be watertight, exposing themselves to vulnerabilities and regulatory scrutiny.
While 43.5% of respondents said that they have banned WhatsApp, 2024’s survey results show a gradual shift towards the compliant implementation of solutions.
In 2024, only 7.8% of firms say that they do not have a clear plan in place to tackle off-channel communication channels, such as WhatsApp. This has fallen since 2023’s report, in which far more compliance teams said that they did not have a plan (25.6%). This shows that, though compliance solutions may not yet have been implemented, plans have been formulated, and fewer organizations are uncertain as to how to manage off-channel communications.
Moreover, 10.3% of 2023’s survey respondents said that they allow all communication channels, and monitor them all. This has increased to 17.4% in 2024.
While only a move of around seven percentage points, this again points to a shift in approach whereby organizations are implementing compliant solutions that allow for the capture, storage, and monitoring of all relevant business communication channels.
This broadly aligns with the findings of Global Relay’s Data Insights Report in 2023 which analyzed the data of 10,000 financial services firms to understand the communication channels they were capturing.
This report found that, over the course of five years, purchasing decisions for compliance technology had increased significantly. In particular, firms have made significant investments in the capture of communications data across fast-emerging communication channels, including WhatsApp, SMS, and LinkedIn.
“We allow WhatsApp if the employee consents to archiving. Unarchived platforms may only be used for logistical communications.”
Private Equity, North America
“I oversee the rigid implementation of a specific internal company communications policy which outlines the approved platforms.”
Chief Compliance Officer, Asset Manager, Global
“We're using Global Relay's Messaging App which allows sending WhatsApp messages from a business phone number that is monitored.”
Director of Compliance, Financial Services, North America
“We require WhatsApp communications to be captured and saved by employees.”
Chief Compliance Officer, Venture Capital, Global
“We allow WhatsApp using a wrapper solution so communications are archived.”
Chief Compliance Officer, Asset Manager, North America
“Policy directs what comms are permitted and clearly indicates any new tools must be approved by Compliance.”
Director of Compliance, Insurance, North America
