In the first half of 2021, nearly $1 billion in fines were levied against major financial institutions worldwide for misconduct. And it was only a year earlier that Goldman Sachs reached a $3.9 billion settlement agreement with the Malaysian government over the investment bank’s role in the 1Malaysia Development Berhad (1MDB) scandal.
Across the world, and especially in Asia, there is a noticeable increase in appetite for regulators to supervise their markets more strongly than ever. This is reflected in both the number and amount of fines, alongside criminal prosecutions.
At this week’s Spotlight: Asia event, Jordan Domash general manager of Relativity Trace, and Sarah Post, Relativity’s head of customer success, broke down what regulators are looking for across Asia and how compliance teams are keeping up. Regulators such as the Monetary Authority of Singapore (MAS), Hong Kong SFC, China Securities Regulatory Commission, and the Reserve Bank of India are the key regulators in Asia, and their advice is clear: Every communication needs to be monitored.
Preaching to the compliance choir
While regulatory reports and prioritization letters are released continually, they’re not just making suggestions—they are levying fines to ensure compliance. Whether a company is proactively monitoring or not, misconduct poses serious risk, reputational damage, and significant financial costs to organizations. The expectations of regulators across all industries are that organizations have robust communication surveillance technology in place to catch misconduct.
It’s important to remember, however, that this didn’t just start because of the pandemic— these regulations were taking the mainstage before workplaces became our homes, as Jordan explains. In 2019, HK SFC fined a firm $5 million for regulatory breaches including poor monitoring and oversight.
“Our changing hybrid work environment has continued this focus on monitoring, and this year, the MAS has charged individuals with inducing others to deal using fraudulent statements in Telegram chat groups,” Jordan says.
“There is an industry-wide effort to make sure that even if we are at home and we have employees with personal mobile devices, they can’t be texting business communications on that device, and if they are, you need a mechanism to make sure that it’s captured, recorded, and monitored,” he added.
It’s not just anti-money laundering (AML) and corruption that companies have to monitor for, either. There are many other forms of social and ethical misconduct, like discrimination and harassment, that can be just as costly. As the 1MDB scandal taught us, misconduct hurts everyone involved, and large companies are forced to pay the price for decades.
It’s not enough to claim that as an organization you’re making ethical and socially responsible investments—regulators are actively looking to make sure companies can back that claim up.
“Regulators are ensuring that organizations maintain a high bar for social conduct and making sure that they are good stewards of their culture,” Jordan says.
Monitoring for offensive language, sexual harassment, bullying, and ethical investments is becoming more important. But how do compliance leaders keep up?
Meeting challenges with communications surveillance
Detecting misconduct is difficult. Between ever-expanding lists of data sources and multilingual global teams, there are a variety of challenges that organizations must address. Here are some of the specific challenges teams in Asia shared:
Multi-language surveillance: Although English is the most common language at global financial institutions, many other languages are spoken by employees. Home to over 5 billion people, Asia boasts more than 2,300 languages and dialects. In a report by Opimas, Hindi, Mandarin, and Cantonese are the languages spoken most often by global banking organizations. “It’s not just that everyone is speaking one language, it’s that they’re speaking multiple languages. Comms surveillance has to be able to monitor all of them equally well,” Jordan says.
Increasing alert volumes: A 2020 study of FSIs in Asia found that one of the most common pain points for compliance teams was numerous irrelevant alerts and diminishing team sizes. Relying on only lexicon- and metadata-based searching, teams can be bombarded with hundreds of thousands of false positive alerts a week.
Hybrid work: “Hybrid working environments means that Asia communicates differently today than they did yesterday, and it’s harder to monitor,” Jordan says. It’s no secret that data sources have increased during the pandemic. Mobile and voice data capture are key to a compliance team’s success. Many surveillance platforms aren’t adept at capturing audio communications, however. We speak faster than we type—40 words per minute typing versus 100-200 words per minute speaking—which means that platforms must ingest and analyze two to four times more audio data per person than written communication.
Global banking firm reaps rewards of proactive surveillance
When facing challenges such as these, compliance teams need to utilize every tool available, including a best-in-class communications surveillance platform. There is no one-size-fits-all for communication surveillance, which is why a flexible platform is necessary to meet Asia’s evolving regulatory needs.
Actions speak louder than words, however, which is why Sarah joined to discuss a local customer that has seen great success after implementing Trace. This customer, one of the largest financial groups in Japan, was looking to monitor more than 500 employees with the ability to surveil audio and electronic communications in primarily, but not only, Japanese and English.
Centralizing the data in one place on a flexible platform was key to satisfying their complex workflow requirements. Previously, this customer was using three separate tools to monitor their communications, toggling between each to capture alerts. Today they use just one tool, that eliminating the “swivel chair” effect, and by leveraging AI, they’ve been able to reduce by 92 percent their overall alert volume.
“By reducing false positives, their team can now isolate the risks and address the real problems showing up in their communications data,” Sarah says. “Another pain point for them was based on their multi-lingual teams. Not every compliance officer fluently speaks all the monitored languages—most commonly Japanese. Workflows needed to account for language identification and routing to specific compliance officers based on languages present. But with adaptable routing, alerts based on language identification for both written and audio communications are sent to the right reviewer.”
Innovation is two-fold. Technology development continues to evolve at breakneck speed, and in order to keep up, compliance leaders must be able to trust in their system. A system like Relativity Trace proactively monitors for misconduct that Asian regulators are looking for by seamlessly capturing mobile and voice communications.
Raechel Karas is an administrative assistant for Relativity Trace.
