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The Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) together fined JPMorgan Chase Securities (JPMC) $200 million after staff used personal chats for company business. The bank was fined for failing to track work-related communications on employees’ personal cell phones and email.
According to the SEC, employees in the securities division of JPMC avoided oversight by discussing company business on their personal devices via text messages, personal email accounts, and messaging service WhatsApp. This violates numerous securities regulations covering business-related communications, which must be archived and searchable to respond to client issues and/or government requests.
Record-keeping is “an essential part of market integrity and a foundational component of the S.E.C.’s ability to be an effective cop on the beat. As technology changes, it’s even more important that registrants ensure that their communications are appropriately recorded and are not conducted outside of official channels.”
– Gary Gensler, S.E.C. chairman
In addition to the fine, JPMC will need to retain a consultant to investigate their record-keeping practices and commence remedial training for employees on proper handling of communications. An Artificial Intelligence (AI)-enabled unified communications system would have helped manage security and compliance.
How can financial institutions ensure compliance across communications channels while seamlessly maintaining business-critical communications?
This is a critical question for companies in highly regulated industries, such as financial services. Companies don’t need to give up ease and convenience for security and compliance. But compliance can be difficult to implement, particularly when you consider that the same retention and supervision requirements that apply to text-based communications, such as emails, apply to all forms of electronic communications, including audio, video, SMS/texting, and messaging.
The problem with ensuring compliance stems from the proliferation of digital channels coupled with the customer’s expectation of being able to use the communication tools and apps they want and are most comfortable using. Fortunately, there is a solution. By using a cloud-based unified communications platform, not only will all forms of communication be captured and archived, but layering artificial intelligence (AI) and machine learning will enable and automate detection for compliance risk. In the case of a regulatory request, any relevant content or data can be surfaced to compliance teams and shared with government regulators and auditors.
Cloud-enabled unified communications can simplify compliance
In the past, financial institutions recorded and stored their audio, messages, and video communications. Sometimes they ran speech-to-text so they could run keyword searches, and when auditors asked, they were able to pull the tapes to share the requested information. But now, it seems the process of “record and store” is no longer enough.
New modes of communication—including fragmented and multiple duplicative systems offering messaging, voice, and video connections—have made the job difficult for compliance teams to monitor and track all of their employees’ communications, or the tools available on the older on-premises platforms were not easy to use. However, an AI-enabled and cloud-based unified communications platform can give firms the tools, access points, and economies of scale to efficiently feed multiple systems for surveillance, compliance, audit, and proprietary analysis while enabling the communications modes (messaging including SMS, video, phone) that empower employees to work effectively.
RingCentral has helped companies like First Credit Services and Walker Crips Group adhere to regulatory requirements by recording and archiving calls. The RingCentral platform API for call recordings provides a system for automatically downloading and archiving the audio files and corresponding call logs to a cloud storage array at the end of each day.
3 takeaways—using AI and cloud communications to meet regulations, at scale
1. A unified communications platform enables financial institutions to leverage communication channels that provide the highest level of personal touch and engagement and stay compliant with regulations.
When seeking advice on high-value decisions, most customers need that human touch. For instance, according to an Accenture study, 88% of consumers demand a more personalized experience when buying insurance. A unified communications platform allows customers to interact with their financial institutions on their own terms and via preferred means of communication.
2. Businesses can use AI to scale cloud communications efficiently while achieving compliance.
Some organizations rely on compliance teams to manually review their call recordings each year for compliance violations, but they are only able to complete a fraction of them. AI and machine learning can help bring these teams out of the trenches by automating this process, ensuring that 100 percent of cloud communications are reviewed, and focusing compliance teams’ more intensive review efforts on higher-risk content and more critical tasks. Make sure your communications platform can seamlessly integrate with leading AI and ML compliance tools to enable a complete solution.
3. Bringing AI capabilities to cloud communications can help reduce organizational risk across financial services.
Banks, investment management, asset management, mortgage, and insurance companies can benefit from this strategy and must evaluate their approach to supervision and compliance as they continue to innovate how they communicate with their customers.
Incorporate regulatory-grade security and compliance into every conversation
RingCentral’s unified communications platform protects your customer and corporate data against security and compliance breaches and gives your customers the highest standard of data protection, including:
Same redundant infrastructure as Nasdaq and NYSE
Support for FINRA-regulated customer compliance requirements
Seven layers of security
TLS and SRTP encryption between all endpoints
“Enterprise-Ready,” Skyhigh’s CloudTrust™ highest rating
Integration with CRM systems and client logs that capture all client communications across all channels automatically
Real-time file-sharing capabilities
Business and personal texts are kept separate
Ability to track and retain all solicitations and recommendation conversations
Additionally, a best-in-class unified communications platform should be SOC-certified, ISO-certified, GDPR-compliant, and PCI-compliant.
Ensure compatibility with leading AI and ML compliance tools
Many financial institutions have deployed AI and ML tools to monitor compliance, but these tools are only as effective as the data they can access. RingCentral offers customers a complete solution through out-of-the-box integrations to leading partners like Theta Lake, Smarsh, and Liquid Voice, among other leading AI and ML analysis tools. We also offer an open platform that can easily integrate with your existing AI and ML analysis suite. Learn more about our platform here.
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Originally published Dec 23, 2021