Matthew Caine, NICE EMEA’s Regional Director of Communications Compliance explains why firms need to re-evaluate compliance approaches in today’s hybrid working-world, and how to avoid rising regulatory risks and fines
Late last year, the SEC announced a $200 million fine for a global bank that had lapsed in its compliance with regulatory requirements around communications monitoring. This followed a shot across the bow from the FCA, which warned banks and wealth management firms of the perils of skirting compliance for advisors and traders working from home. As regulatory requirements and penalties continue to proliferate, financial institutions are abandoning old methods of maintaining compliance in favor of more technologically advanced approaches.
Just how bad is the problem? We’re now seeing global banks setting aside funds in anticipation of being fined for unauthorized communications practices, including personal account dealing, money laundering, market manipulation, tax evasion, and even activities that weren’t previously within the scope of their ethics policies. And firms’ widening definitions of misconduct, which can now include other risk-evoking scenarios, like harassment and discrimination, are creating escalating exposure to penalties and reputational damage.
When it comes to detecting these types of risks, firms are at a loss. Most firms rely on manual rule-driven methodologies to create alerts, which are subsequently reviewed by compliance teams. Investigations usually involve manual searching for and reviewing communications, like calls and emails. As a result, communications are only ever reviewed after they are flagged, instead of being reviewed proactively.
Another problem with this approach is that most surveillance systems take a cookie cutter approach to generating alerts, and at the end of the day every firm is unique. Firms have unique asset classes and strategies, play in different markets, and even have unique cultures and styles of communications. This means that alerts often have to be customized and tailored, which can come at a great expense.
At the same time, the proliferation of new communication channels, used by regulated employees both in the office and at home, are making misconduct harder to catch. According to a NICE Actimize survey, 60% of firms are not monitoring newer communication channels, including Microsoft Teams, Bloomberg Chat, Zoom and WhatsApp. As a result, firms are getting ensnared in fines as large as $200 million due to record keeping and surveillance lapses.
But before firms can monitor these new communication channels, they first need to be able to record them. Here, omni-channel compliance recording is essential.
NICE’s NTR-X meets these demands by providing one solution for capturing all types of regulated employee communications, conducted via turrets, mobile phones, PBXs (desk phones), and unified communications platforms (including Microsoft Teams).
Part of NICE’s end-to-end Compliancentral holistic compliance suite, NTR-X can record any media sources exchanged through Teams – from video to chat to screen-sharing and A/B calling. And, NTR-X’s one-platform approach lets you apply the same archiving and retention rules to all recorded communications, so you can adhere to regulatory requirements however your regulated employees communicate. Having a single, centralized solution also empowers firms to benefit from workflow efficiencies and lower cost of ownership.
Beyond simply capturing communications, NICE’s Compliancentral bridges communications capture and surveillance by working alongside NICE’s Holistic Surveillance solution, SURVEIL-X.
Using advanced analytics and AI (including Natural Language Understanding), SURVEIL-X accurately detects various types of market abuse and conduct risk, by monitoring regulated employee communications across every communication channel (voice, video, chat, etc.), even across messaging apps (like WhatsApp) and commonly used unified communication platforms (like Microsoft Teams).
If firms operated in a world where there were no consequences for misconduct and reckless behavior, surveillance technology wouldn’t matter. But with hundred million dollar or more fines on the line, firms are finally realizing they need to take a more technologically-driven approach to bolster their surveillance efforts.