- Chief Compliance Officer and VP of Legal Affairs, Arrow Electronics
By 
Aaron Nicodemus2023-07-25T20:24:00
Blowback from the large fines levied against banks and financial services firms for allowing off-channel business communications by their employees continues to reveal itself in varying ways.
The issue gained widespread attention as part of a regulatory crackdown by the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), who combined to issue $2 billion worth of penalties against a dozen of the world’s largest financial institutions between December 2021 and September 2022.
The regulators said they identified “widespread and longstanding failures” in monitoring, maintaining, and preserving electronic communications by employees at JPMorgan Chase, Goldman Sachs, Citi, Bank of America, Barclays, Credit Suisse, Deutsche Bank, Morgan Stanley, and UBS, among others.
Another round of smaller fines against HSBC and Scotiabank for similar misconduct was announced by the regulators in May.
The latest aftershock from the crackdown has been stockholder lawsuits.
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Establishing a set of policies and procedures to prevent employee use of nonauthorized electronic communications to conduct business is relatively straightforward. The hard part is monitoring compliance.
The Securities and Exchange Commission and Commodity Futures Trading Commission have indicated they will be more forgiving to financial services firms that voluntarily self-report recordkeeping violations and take remedial actions before being asked to do so.
The Securities and Exchange Commission and Commodity Futures Trading Commission continued their crackdown on financial firms’ recordkeeping failures regarding employee use of off-channel communications with $555 million in total fines levied against nine institutions and their affiliates.
When the DOJ released its revised Evaluation of Corporate Compliance Programs, it turned some heads. Tucked into a section on risk assessments was a strongly worded series of questions that appeared to shoulder compliance teams with the responsibility for ensuring the safe use of AI tools by their firms.
The Department of Justice’s Evaluation of Corporate Compliance Programs has made the importance of artificial intelligence governance frameworks clear, but it didn’t say what role compliance should play. Here’s the answer.
The U.S. Department of the Treasury’s Financial Crimes Enforcement Network issued an alert to financial institutions about their obligations to report deepfakes, warning artificial intelligence has given bad actors additional tools in their arsenal.
