Connect with us

Tech

Asset managers on alert after ‘WhatsApp’ crackdown on banks

Published

on

  • Demand for software to record, archive messaging on the rise.
  • Banks pay hundreds of millions of dollars in regulatory fines.
  • Continued remote working underscores risk of compliance missteps.

LONDON: Asset managers are tightening controls on personal communication tools such as WhatsApp as they join banks in trying to ensure employees play by the rules when they do business with clients remotely.

Regulators had already begun to clamp down on the use of unauthorised messaging tools to discuss potentially market-moving matters, but the issue gathered urgency when the pandemic forced more finance staff to work from home in 2020.

Most of the companies caught in communications and record-keeping probes by the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have been banks – which have collectively been fined or have set aside more than $1 billion to cover regulatory penalties.

But fund firms with billions of dollars in assets are also increasing their scrutiny of how staff and clients interact.

“It is the hottest topic in the industry right now,” said one deals banker, who declined to be named in keeping with his employer’s rules on speaking to the media.

Reuters reported last year the SEC was looking into whether Wall Street banks had adequately documented employees’ work-related communications, and JPMorgan was fined $200 million in December for “widespread” failures.

German asset manager DWS said last month it had set aside 12 million euros ($12 million) to cover potential U.S. fines linked to investigations into its employees’ use of unapproved devices and record-keeping requirements, joining a host of banks making similar provisions, including Bank of America, Morgan Stanley and Credit Suisse.

Sources at several other investment firms – described in the financial community as the ‘buy-side’ – including Amundi, AXA Investment Management, BNP Paribas Asset Management and JPMorgan Asset Management, told Reuters they have deployed tools to keep all communications between staff and clients compliant.

Spokespeople for the SEC and CFTC declined to comment on whether their investigations could extend beyond the banks, but industry sources expect authorities to cast their nets wider across the finance industry and even into government.

Last month Britain’s Information Commissioner’s Office (ICO), the country’s top data protection watchdog, called for a review of the use of WhatsApp, private emails and other messaging apps by government officials after an investigation found “inadequate data security” during the pandemic.

Good business for some

Regulations governing financial institutions have progressively been tightened since the global financial crisis of 2007-9 and companies have long recorded staff communications to and from office phones.

This practice is designed to deter and uncover infringements such as insider trading and “front-running,” or trading on information that is not yet public, as well as ensure best practices in terms of treatment of customers.

But with thousands of finance workers and their clientele still working remotely after decamping from company offices at the start of the pandemic, some sensitive conversations that should be recorded remain at risk of being inadvertently held over informal or unauthorised channels.

Brad Levy, CEO of business messaging software firm Symphony, said concerns about managing that risk had driven a surge in interest for software upgrades that make conversations on popular messaging tools including Meta Platforms’ WhatsApp recordable.

“Most believe the breadth of these investigations will go wider as they go deeper,” Levy said.

“Many market participants have retention and surveillance requirements so are likely to take a view, including being more proactive without being a direct target.”

He said Symphony’s user base has more than doubled since the pandemic to 600,000, spanning 1,000 financial institutions including JPMorgan and Goldman Sachs.

Symphony peer Movius also said its business lines specialising in making WhatsApp and other tools recordable have more than doubled in size in the space of a year, with sales to asset managers a growing component.

“Many on the buy-side have recognised that you can’t just rely on SMS and voice calls,” said Movius Chief Executive Ananth Siva, adding that the company was also seeking to work with other highly-regulated industries including healthcare.

Movius software integrates third-party communications tools such as email, Zoom, Microsoft Teams and WhatsApp into one system that can be recorded and archived as required, he said.

Amundi, AXA IM, BNPP AM and JPMorgan Asset Management all confirmed they had adopted Symphony software but declined to comment on the full breadth of services they used or when these had been rolled out.

Amundi and AXA IM both confirmed they used Symphony services for team communications, while AXA IM also said they used it for market information.

Amundi, BNPP AM and JP Morgan AM declined to comment on whether they thought regulators would seek to investigate record keeping at asset managers after enforcement actions against the banks were completed.

A spokesperson for BNPP AM said it had banned the use of WhatsApp for client communications due to compliance, legal and risk considerations including General Data Protection Regulation (GDPR).

Tech

Zindagi Trust gets featured on Meta website for transforming Pakistan’s education system

Published

on

By

KARACHI: In Pakistan, where a staggering number of over 28 million children are out of school and education infrastructure widely suffers, Zindagi Trust which is a non-profit organisation, is dedicated to revolutionising the education system.

Founded in 2003 by famous Pakistani singer Shehzad Roy, the trust works on the mission to provide quality education to underprivileged children and reform government schools in Pakistan, through pilot projects at model schools and advocacy with the government.

For its success in reaching and engaging supporters as an early adopter of WhatsApp Channels, Zindagi Trust has been featured on Meta’s website as a case study for government and charities.

The Trust is notably the first non-profit organisation from Pakistan to receive this recognition.

Capitalising on the popularity of Meta-owned messaging app, WhatsApp, Zindagi Trust set out with the objective of reaching new audiences, raising awareness, and facilitating fundraising.

It launched a WhatsApp Channel, through which emphasis was placed on initiatives extending beyond model schools, impacting government schools nationwide.

Zindagi Trust saw a significant surge in followers, a 7% increase in donations, and increased reach across its social ecosystem.

Speaking to Geo.tv, Zindagi Trust’s Senior Marketing & Resource Development Manager Faiq Ahmed said that WhatsApp channels have significantly contributed to the realisation of Zindagi Trust’s objectives by establishing a direct and interactive platform for communication with education and child protection enthusiasts.

Talking about collaboration with the government sector, Faiq said that their advocacy initiatives with the government’s help have left an indelible mark on Pakistan, catalysing groundbreaking changes nationwide.

“Through collaboration and perseverance, we continue to shape a brighter future for the children of Pakistan, not only in the education sector but also in areas vital to the well-being of our society,” he added. 

Continue Reading

Tech

Facebook and Instagram full of predators for children, alleges lawsuit

Published

on

By

Meta’s social media platforms of Facebook and Instagram have become fertile grounds for child predators and paedophiles, revealed New Mexico’s Attorney General, Raul Torrez in a lawsuit.

Torrez’s office used fake accounts to conduct investigations and discovered that these fake accounts of minors were dispatched ‘solicitations’ and explicit content.

The lawsuit seeks court-ordered changes to protect minors, asserting that Meta has neglected voluntary actions to address these issues effectively.

In its response, Meta defended its initiatives in eradicating predators. However, New Mexico’s investigation disclosed a higher prevalence of exploitative material on Facebook and Instagram compared to adult content platforms.

Attorney General Torrez underscored the platforms’ unsafe nature for children, describing them as hotspots for predators to engage in illicit activities.

While US law shields platforms from content liability, the lawsuit argues that Meta’s algorithms actively promote sexually exploitative material, transforming the platforms into a marketplace for child predators.

The lawsuit accuses Meta of misleading users about platform safety, violating laws prohibiting deceptive practices, and creating an unsafe product.

Moreover, the lawsuit targets Facebook founder Mark Zuckerberg personally, alleging contradictory actions in enhancing child safety while steering the company in the opposite direction.

In response, Meta reiterated its commitment to combating child exploitation, emphasizing its use of technology and collaborations with law enforcement to address these concerns.

Continue Reading

Tech

Meta finally launches end-to-end encryption on Messenger

Published

on

By

Meta announced Thursday that it is finally implementing end-to-end encryption for one-on-one conversations and calls on Messenger, delivering on a long-standing commitment.

The company states that when end-to-end encryption is enabled, the only people who can view the contents of a message sent through Messenger are the sender and the recipient.

Messenger’s encrypted chat function was initially made available as an opt-in feature in 2016. However, following a protracted legal dispute, end-to-end encrypted messages and calls for two-person discussions will now be considered the norm.

“This has taken years to deliver because we’ve taken our time to get this right,” Loredana Crisan, vice president of Messenger, said in a statement shared with The Verge.

“Our engineers, cryptographers, designers, policy experts and product managers have worked tirelessly to rebuild Messenger features from the ground up.”

A representational picture of Messengers new feature. — Meta
A representational picture of Messenger’s new feature. — Meta

Crisan states that encrypted chats will not compromise Messenger features like themes and custom reactions. However, it may “take some time” for all chats to switch to default encryption.

The end-to-end encryption for group chats is still opt-in. Additionally, Instagram messages are still not encrypted by default, but Meta expects this to happen “shortly after” the rollout of default private Messenger chats.

Meta CEO Mark Zuckerberg announced in 2019 that the company planned to move toward encrypted ephemeral messages across its messaging apps, according to The Verge.

“I believe the future of communication will increasingly shift to private, encrypted services where people can be confident what they say to each other stays secure and their messages and content won’t stick around forever,” he wrote in a Facebook post. “This is the future I hope we will help bring about.”

By enabling encryption by default, most Messenger chats should remain unseen by Meta, and it will also prevent the company from providing the data to law enforcement.

Last year, a 17-year-old from Nebraska and her mother faced criminal charges for illegal abortion after police obtained their Messenger chat history.

Anti-encryption advocates argue that encryption makes it harder to identify bad actors on encrypted messaging apps like WhatsApp.

Continue Reading

Trending