HSBC is contemplating a ban on text messaging using company-issued devices in response to regulatory issues that have arisen due to unauthorized use of communication channels such as WhatsApp by employees. This move, which will not impact personal devices, comes as the bank continues to adjust its corporate device functionality to comply with regulatory obligations.
The decision follows a $75 million settlement that HSBC paid to the Commodity Futures Trading Commission (CFTC), a portion of which, $30 million, was tied to an investigation into the unauthorized use of communication channels. The bank also incurred a $15 million fine from the Securities and Exchange Commission (SEC) for record-keeping violations.
These penalties were levied after it was discovered that top HSBC staff had violated rules by using unapproved communication methods on their personal devices. Only select regulated roles will retain messaging capabilities under the proposed policy.
HSBC is not alone in facing such penalties. Other financial institutions have been fined for similarly lax record-keeping practices. JP Morgan Securities was fined $200 million in 2021, while UBS and Barclays were among 16 firms collectively fined $1.8 billion by the SEC for misuse of personal devices and unauthorized apps for business transactions.
Private equity firms such as Carlyle Group (NASDAQ:CG) and Blackstone (NYSE:BX) are currently under investigation for similar charges, and the Bank of Nova Scotia recently settled similar charges for $22.5 million.
Across the globe, banks have suspended the use of encrypted apps for work following regulatory violations, signaling increased scrutiny over private messaging platforms in business operations. However, HSBC's proposed ban remains unconfirmed at this time.
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