HSBC is disabling texting capabilities on company-issued phones following a regulatory crackdown on the use of unauthorized communication methods, Bloomberg reported on Tuesday, citing unnamed sources.
Work phones will be unable to send or receive text messages, sources told the wire service. They are already unable to use WhatsApp, the digital messaging app at the center of hundreds of millions of dollars in fines regulators have hit big banks with since last year.
“Banks use a wide range of approved channels to communicate in compliance with regulatory obligations,” a spokesperson for the bank told Bloomberg. “HSBC, like many other banks, reviews and adjusts functionality on its corporate devices as needed.”
A small number of workers will still be allowed to text from their work phones, where texts are archived, the sources told Bloomberg. Personal devices are not included in the ban, they said.
HSBC found itself in regulators’ crosshairs earlier this year over its failure to monitor the use of unauthorized messaging apps that led to recordkeeping violations. The Commodity Futures Trading Commission and the Securities and Exchange Commission fined the lender $30 million and $15 million, respectively.
Earlier this year, Bank of Nova Scotia settled with the SEC and CFTC on similar charges for $22.5 million. And last September, 11 banks paid the CFTC and SEC a combined $1.8 billion to settle recordkeeping violations.
CFTC Commissioner Christy Goldsmith Romero said at the time, “Wall Street institutions do not get to keep regulators in the dark while enjoying all of the benefits of being a regulated entity in U.S. financial markets. Those choosing to participate in U.S. financial markets are on notice — The era of evasive communications practices is over. The CFTC will hold you accountable.
“It’s time for Wall Street to stop waiting for an enforcement action before it changes its practices. Tone at the top must change on Wall Street,” she said. “Change can only happen if the banks’ C-suite establishes a culture of compliance over evasion.”
More recently, regulators have broadened their attention to unapproved messenger-related recordkeeping violations to parts of the financial system beyond banks. The CFTC fined New York-based multinational brokerage firm Interactive Brokers $20 million last month for failing to keep records as required by the CFTC due to the “widespread use of unapproved communication methods,” including text messages and WhatsApp.
