Banking Risk and Regulation

The UK financial watchdog said it is finding it “challenging” to pull together a cost-benefit analysis of its controversial proposals to ‘name and shame’ firms under investigation; risk experts say the 'fussy Fed' is demanding near-perfect data standards; and advocates warn Donald Trump’s re-election and the Republican party’s clean sweep in Congress will stall consumer fraud protections.

🔎 The FCA is taking a hard look at how UK banks monitor encrypted messaging apps like WhatsApp following the $3bn+ fines seen in the U.S.    📱 But compliance doesn’t stop there – firms need to be proactive in addressing gaps in LinkedIn and voice surveillance, too. As SteelEye CEO Matt Smith points out in this Banking Risk and Regulation article, banning WhatsApp usage may not be enough. Additionally, firms need to tackle the LinkedIn dilemma and improve their voice surveillance practices. ➡ Read the full article here: https://lnkd.in/gG2xejgN #SteelEye #Compliance #WhatsApp #LinkedIn #VoiceSurveillance #FCA 

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🔍 After a harrowing few years in which the U.S. Securities and Exchange Commission fined firms more than $3bn for lax record-keeping of instant messages, UK financial institutions are now under the microscope — and the findings won’t please the regulator. 📱 It was revealed in September that the Financial Conduct Authority asked banks to report how they police their employees’ use of encrypted messaging apps like WhatsApp. 🏠 The survey comes after the move to remote working during the pandemic sparked a surge in communicating over instant messaging apps, raising concerns that deal-related comms are not properly monitored. 💸 With the bruising fines levied on firms across the pond for WhatsApp infractions, FCA enforcement staff will be hoping that UK banks have reviewed their own communications compliance practices and set up sophisticated policies and procedures. 📈 After all, the FCA hinted last year it would be replicating US regulators’ approach. 😬 The watchdog may be in for a nasty shock, writes Matt Smith of SteelEye. 👀 Read more below. https://lnkd.in/eteCMArz #WhatsApp #FCA #SEC #Banking

👀 The Financial Conduct Authority is finding it “challenging” to prepare a cost-benefit analysis of its controversial proposals to ‘name and shame’ firms under investigation, amid pressure to satisfy critics. 💬 Chief executive Nikhil Rathi told a House of Lords committee that the UK watchdog was still analysing the cost of a watered-down version of the plans, reports Francesca Washtell. 🔄 He promised that the FCA would “fundamentally reshape” its proposals to publicly name some companies being probed for misconduct and at a much earlier stage to act as a deterrent. 📅 A revised version of the plan would be published “in the next week or so,” Rathi said. 💥 The new “name and shame” strategy was put forward in February, after the FCA was criticised for issuing just eight fines in 2023, but faced a fierce backlash both from the City of London and politicians. ⬇ Read more below. https://lnkd.in/emdTcM-d #FCA #Banking #BankingIndustry

📊 Regulators increasingly demand near-perfect data standards that are impossible to achieve, say exasperated risk and control specialists, in anticipation of penalties, writes Simon Brady. 🕵️ For any control to function correctly, the data it relies on must exist and be correct. Pre-trade and post-trade data, vital for trade surveillance and risk assessments, are under growing forensic scrutiny to be not only timely, accurate, and complete but also free of undocumented changes as they flow through a bank’s ecosystem. 🤔 However, the way regulators — particularly the Federal Reserve Board — are going about it is raising concerns among risk experts, who spoke to Banking Risk and Regulation anonymously out of fear of upsetting the regulator. 🔇 The Fed declined to comment on these concerns, which follow on from recent enforcement action against banks for problems that boil down to data management issues. 🏦 As major enforcement actions against JPMorgan and Citibank illustrate, the move marks a shift from regulators, in particular the Fed, as supervisors look beyond how well risk controls perform to the fundamental architecture that underpins them. 👀 Read more below https://lnkd.in/edPNMwmk

Here's my latest for Banking Risk and Regulation. Click on the links below for more on the latest episode of Following the Rules ft. guidance for banks looking to effectively track and address non-financial misconduct from Smarsh's principal regulatory adviser Shaun Hurst and Paul Taylor, Smarsh's vice president for product management for enterprise conduct. #followingtherules #podcast #nonfinancialmisconduct #AI #GenAI #WhatsApp #communicationssurveillance

📉 UK banks face mounting pressure to monitor a broader swathe of their workforce’s communications as the Financial Conduct Authority roots out non-financial misconduct. 🚫 NatWest has clamped down on off-channel comms by banning employees from using WhatsApp, Facebook Messenger and Skype on their work devices, it was revealed this week. 📊 It follows damning findings from the FCA that reports of NFM at UK banks soared by 70 per cent between 2021 and 2023. 🤖 The case for proactive monitoring and AI-driven solutions to address this challenge is growing more compelling. 🎙️ Shaun Hurst and Paul Taylor from surveillance technology provider Smarsh spoke to Lucy McNulty from the Following the Rules podcast about how banks can better track — and ultimately address — non-financial misconduct. 👀 Read an excerpt of her Q&A with them below. https://lnkd.in/ejgEFejM #NonFinancialMisconduct #Banking #BankingIndustry

🐘 Donald Trump’s re-election and the Republican party’s advance in US Congress could stall consumer protections for fraud, warn advocates, who fear a lighter-touch regulatory approach will halt much-needed reform. ⚖️ The Trump-Vance administration could appoint judges less sympathetic to scam victims and also get regulators to adopt a less aggressive approach, experts say. They are also worried Congressional Republicans will focus more on “consumer education” rather than on strengthening existing laws to protect consumers. 📈 This comes as fraud itself is on the rise. The Federal Trade Commission reports that most of the $10bn-plus victims lost to scammers in 2023 — up 14 per cent from the year before — came through crypto or bank transfers. 🇬🇧 While the UK has pushed out legislation to compensate victims, political gridlock in the US and persistent pushback from banks could impede similar efforts, especially with the Republicans close to gaining full control of Congress. 🚨 “That could put more people in harm’s way,” cautions Adam Rust, from the Consumer Federation of America. 📣 He expects a Republican-controlled Congress to tackle fraud primarily through consumer awareness initiatives rather than regulatory reform. Tim Scott is tipped to lead the Senate Banking Committee, a shift that could curtail legislative support for fraud victims. Story by Allison Prang. Read more below. https://lnkd.in/e6TCqM8f #DonaldTrump #Trump

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