WhatsApp has traditionally been perceived as a personal channel of communication, reserved for private conversations and social group chats. But that perception has now changed, as the use of WhatsApp for business communication is becoming standard across the financial, professional, and even public services industries, says Alex Viall, chief strategy officer at Global Relay, provider of electronic communication compliance and archiving solutions. 

As the lines between personal and business communication have blurred, the challenges that have beset financial services firms have had some interesting parallels in public life too. The recent scandal in the UK government relating to government business communicated over WhatsApp throughout the Covid-19 pandemic is a prime example. 

This came to light as a result of an investigation into the government's handling of the Covid-19 pandemic - the investigation required access to communications on WhatsApp that exposed part of the government ministers' decision-making process.

The debate has centered on the ability to get investigatory access to the ‘private' WhatsApp messages of Boris Johnson, the UK prime minister at the time. Those leading the inquiry have indicated that transparency of this seam of communication is necessary to ensure a full picture of what happened and how government business was conducted.

This question is no longer up for debate in financial services. A slew of multi-million-dollar regulatory fines in the US for the noncompliant use of WhatsApp since December 2021 has spooked the finance industry. The use of ‘off-channel 'methods of communication, for example iMessage, WhatsApp, and WeChat, are typically not monitored by compliance teams, and if these interactions aren't captured, firms are in violation of basic recordkeeping regulations. 

This goes to the core of electronic communications compliance, the corporate policies related to business communication, and the channels that executives can use when interacting with their colleagues and their customers.

The parallels between regulatory enforcement for off-channel communications in financial services and the UK government's use of WhatsApp' offer key learnings for both sectors.

The importance of regulation in the first place

Transparency and accountability around electronic communications and record keeping are essential in finance in order for regulators to fulfil one of their key objectives which is effective investigation of potential breaches after the fact. A full audit trail with all relevant data before and after a transaction or event is essential for this. Regulators have relied on longstanding recordkeeping rules to drive compliance and ensure a data trail that is accurate, immutable, and complete. 

The UK government is undoubtedly not the only national government to use modern communication channels such as WhatsApp to conduct its operation. But its critics have denounced the government as opaque and unaccountable for these actions. The reputational damage has been significant.

The requirement to capture and monitor communications for recordkeeping in asset management and investment advisory services originates around the need to prevent market abuse such as insider trading, and other misconduct that could result in fraud.

Organizations including government and law enforcement would be more accountable to public and official scrutiny if they were subject to the same recordkeeping requirements that have helped to shape better behavior and deter misconduct in the financial services sector. The realization that a ‘loose' message sent to a personal contact but relating to your job might be read out in a law court or during a government inquiry in the future is usually an excellent control and would give the public confidence that those they elect and pay taxes to conduct public service roles are being as professional and transparent as possible. 

Regulators and governing bodies are cracking down

The reputational hit taken by the UK government should serve as a stark warning to those in the asset management industry of noncompliance.

Regulators are acutely aware of the endemic use of new platforms and personal devices to conduct and arrange business in the regulated finance sector. They are increasingly sceptical of the approach seen at many firms where blanket bans are applied as policy on such communication. 

A more effective solution would be to adopt a compliant technology solution. WhatsApp has an established place in the corporate world, benefiting customer interaction, efficient trading and internal team coordination. It is an efficient and practical means of communication, and a blanket ban on its use will only drive communication under the radar.

This approach is an excellent indicator of a sound compliance culture to regulators. Compliance teams will be able to deliver complete communications records to regulators or law courts in a timely manner when any request is received. Showcasing a structure and process in place for communications compliance puts firms and governments alike in an unchallenged position should they be caught in controversy.

The WhatsApp tide will continue. It is embedded in modern electronic communications across business, finance, politics, and social interaction. In order to reduce uncertainty and present an unquestionable and full picture to critics, communications compliance and record keeping must be constant in any organization. Institutions that take this stance will radically mitigate their reputational, financial, and existential risk.

By Alex Viall, chief strategy officer at Global Relay, the leading provider of electronic communication compliance and archiving solutions.