The Importance of Compliant Off-Channel Communications
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Off-Channel Communications: The New Frontier in Messaging Compliance
A $200 million penalty in December 2021 for JP Morgan escalated into $1.8 billion worth of fines across 16 organizations. Why?
Off-channel communications.
Specifically, off-channel communications that led to non-compliance with regulatory requirements.
Both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) fined JP Morgan due to failing to keep a record of employee communications. This was because employees used personal channels such as WhatsApp for business discussions, preventing complete record-keeping.
What is Off-channel Communication Compliance?
Off-channel communications refer to employee communication that occurs outside of approved and recorded systems, such as personal emails or texts on personal devices.
In regulated industries, such as financial services, client communication is both an opportunity and a risk. Employees and clients may favor communication on personal devices and channels such as WhatsApp and iMessage for convenience. However, when these off-channel communications fall outside corporate monitoring and recordkeeping, this creates a compliance blind spot.
For technology leaders, compliance officers, and risk managers, the rise of these platforms poses an urgent question: how can businesses enable flexibility for employees while maintaining compliance?
To ensure off-channel communications are compliant, robust processes and policies must be produced by organizations, in line with the requirements of regulators.
Fortunately, Custodia is releasing a new service, this October, designed to tackle the off-channel dilemma head-on. Built for regulated employees, it enables them to meet clients where they are, whether that’s on WhatsApp, iMessage, WeChat, Telegram, or SMS, while ensuring their firms stay fully compliant.
Why Off-Channel Communications are Such a Risk?
Most firms already have robust controls over traditional tools within their communication tech stacks, such as email, Microsoft Teams, and Slack.
However, as soon as conversations shift to consumer apps, the ability to monitor and archive them disappears. That gap leaves firms vulnerable to fines, investigations, and reputational damage.
For regulated sectors, this isn’t simply an IT headache or flawed process; it’s a systemic communication compliance challenge.
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The Rising Risks of Messaging Compliance
Without compliance capture, personal communication channels expose firms to regulatory scrutiny, for example:
WhatsApp Compliance Challenges
WhatsApp is one of the most widely used messaging platforms in the world. Clients often may want to reach traders, wealth managers, and relationship managers there because it’s easy and requires less switching between platforms. From a compliance perspective, WhatsApp poses a fundamental problem: without archiving, firms cannot meet messaging compliance obligations leaving them at risk of being fined hundreds of millions of dollars and facing incalculable reputational damage.
SMS Compliance in Financial Services
Ignoring SMS compliance is dangerous. Regulators view text messages no differently from emails or chat logs, as they are business communications that must be preserved. Effective compliance for text messages is essential to avoid gaps in audit trails and recordkeeping.
Compliance vs Customer Service
For employees in regulated industries, there’s a real dilemma when it comes to off-channel communications:
- Serve the client flexibly on WhatsApp, iMessage, or SMS... and risk violating compliance rules
- Adhere strictly to approved platforms and risk frustrating clients who expect convenience
Neither option is sustainable because:
- Employees lose productivity switching between systems
- Clients lose patience with rigid policies
- Compliance teams are left trying to monitor channels they cannot see
The outcome is clear. Messaging compliance must evolve from blocking communication to enabling it compliantly.
Why Leadership Must Reframe Communication Compliance
Every off-channel message is a potential liability.
Forward-thinking leaders are reframing the problem. Communication compliance is not simply about avoiding fines. It is about building a resilient digital workplace where flexibility, security, and trust coexist. Done right, compliance becomes a foundation for:
- Operational efficiency, as employees communicate through a unified, seamless experience
- Risk management, where off-channel exposure is eliminated.
- Data strategy, as every piece of business intelligence is captured
How To Ensure Compliance with Off-Channel Communications
The next era of compliance will not be about restricting employees and clients but empowering them with more options to communicate compliantly. For this, we take a layered approach through:
- Unification through bridging previously off-channel communications into compliant platforms like Teams and Webex.
- Data capture via archiving all historical and live messages into a single, secure cloud.
- Transforming this communication data into an asset that supports analytics, insights, and growth.
This approach reimagines compliance as a competitive advantage. This model allows not just compliant capture and storage, but seamless unification of data that enables better decision-making. However, what makes this truly unique is that this has been crafted for the regulated employee – meaning this service is an enabler for compliant communication, not just a means to capture it.
Keep an eye out on our socials for the full release, coming this October.
It’s Time to Act
The firms that lead in the next decade will not be the ones that restrict communication, but the ones that embrace it securely, seamlessly, and with full compliance.
Solving the challenge of off-channel communications is not just about avoiding fines and loss of licenses, it is about securing the trust, agility, and growth that every modern business needs in an increasingly stringent regulatory landscape.