For financial services industry participants and registrants in particular, the focus by various U.S. federal government agencies on “off-platform” and ephemeral messaging has become unmistakable. Below, we discuss the risks associated with the use of messaging for business communications and offer several practical steps companies can take to limit the resulting regulatory and legal exposure.
Background
Over the last decade, we have seen instant messaging grow as a communication method, and migrate from personal use to a tool for business communications as well. For regulated entities, communications using instant messaging create risks that business communications are not preserved pursuant to the books and records provisions applicable to the financial services industry. These unpreserved messages have been given the name “off-platform,” or at times, “off-channel” communications, because they occur outside the company’s electronic business platform where communications are otherwise preserved. The use of these off-platform communications has been augmented in recent years by the growth of ephemeral messaging applications (apps), such as Signal. Ephemeral messaging is a form of digital communication defined by two characteristics: (1) the automated and timed deletion of a message’s content for both sender and recipient; and (2) end-to-end encryption, which prevents third-party access. In addition to these security advantages, popular ephemeral messaging apps such as Signal, Telegram and WhatsApp are highly intuitive modes of communication and allow for the effective exchange of information without the need for significant IT infrastructure.
As a result of these advantages, the use of ephemeral messaging is becoming more common, even in highly regulated industries. Given the risk of enforcement actions or even criminal liability as described more fully below, now is a good time for every organization, particularly those in the financial services industry, to revisit its policies and procedures and its implementation of those policies and procedures as to off-platform and ephemeral messaging apps in order to ensure compliance with the applicable regulatory requirements. Read more...
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