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You Shouldn’t Really Be Banking on WhatsApp

The Facebook Inc. WhatsApp logo on a smartphone arranged in the Brooklyn Borough of New York, U.S., on Tuesday, Oct. 5, 2021. Signal and Telegram, two private messenger apps, saw downloads and user sign-ups soar during the extended downtime of Facebook Inc.’s network of apps and services.
The Facebook Inc. WhatsApp logo on a smartphone arranged in the Brooklyn Borough of New York, U.S., on Tuesday, Oct. 5, 2021. Signal and Telegram, two private messenger apps, saw downloads and user sign-ups soar during the extended downtime of Facebook Inc.’s network of apps and services. (Bloomberg)
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Smart phones have made life so much more convenient for everyone — well, apart from compliance sheriffs and record keepers at global banks.

HSBC Holdings Plc alerted investors on Tuesday that it was being investigated in the U.S. for its bankers’ use of WhatsApp and other personal messaging services for business purposes. It put the news in a single line in its 2021 results and declined to give more detail.

This is the latest of several signs of a growing crackdown by U.S. market regulators worried that communications convenience has led to complacency. But this isn’t about finance alone. In an era of greater freedom to work wherever, monitoring messages is going to become an uncomfortable issue for employers and their bosses in many more industries.

Bankers’ use of WhatsApp and similar tools has grown alongside the rest of society, but bankers have serious regulatory responsibilities to track information and record who has had access to privatenews about companies or pending trades. Concern about this has been bubbling for years, but the unavoidable switch to remote working for most people during the Covid pandemic over the past two years has sharpened regulators’ attention on communications in financial markets.

Deutsche Bank AG has begun tightening up its rules and monitoring around messaging apps, Bloomberg reported this month, while Credit Suisse last year asked employees for access to their personal mobile phones.

It’s not that banks or regulators think they can block people from quick and easy modern technology, it’s about ensuring that complete records are kept. Banks need to be able to show that inside information has been controlled and procedures for things like risk management were followed – for banks’ own financial safety as well as for preventing wrongdoing.

JPMorgan Chase & Co.’s failures to ensure proper records were kept, including among senior bankers, led to $200 million in fines late last year from the Securities and Exchange Commission and the Commodity Futures Trading Commission. The SEC said the failures had hindered several investigations.

HSBC, which is being investigated by the CFTC, declined to say whether or not it could face any fines. But Ewen Stevenson, its chief financial officer, said the bank “obviously” has procedures and requirements governing staff use of non-official communications.

Banks aren’t alone. Politicians’ use of personal communications – private email accounts and messaging apps – has been tied up in several scandals. In the U.S., Hilary Clinton’s personal email use became a major point of contention in the 2016 Presidential election. In the U.K., there have been calls for inquiries into health ministers’ use of non-official emails to deal with people seeking government business related to pandemic-fighting equipment.

In fact, most companies of any size ought to think harder about what communications they need to archive. It’s not only tightly regulated financial activities that can be investigated. In late 2019, the Dutch competition authority said it hit an unidentified company that was being investigated for anticompetitive practices with a roughly $2 million fine because staff deleted WhatsApp messages during a dawn raid.

Most of us want to resist our work lives bleeding into our personal lives. Companies have growing reasons to keep a good barrier there too.

More From Bloomberg Opinion:

• The SEC Is Going Too Easy on Insider Trading: Michelle Leder

• Web3 Just Had Its Emperor’s-New-Clothes Moment: Parmy Olson

• The Mystery Bank Debt Owed by China’s Developers: Shuli Ren

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Paul J. Davies is a Bloomberg Opinion columnist covering banking and finance. He previously worked for the Wall Street Journal and the Financial Times.

More stories like this are available on bloomberg.com/opinion

©2022 Bloomberg L.P.

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