Ethics versus the regulators – the surveillance challenge

While Amazon and others have come under fire for high-tech monitoring of employees, surveillance and compliance heads at banks have generally pushed back against intrusive techniques on ethical grounds. That approach will not survive the current regulatory push.

As one global surveillance head commented at a recent 1LoD private networking event, “I think regulators know the holiday's over, the pandemic has slowed down, and now they're back on target to actually start digging in deep into our surveillance programme. They’re going to keep digging, and the fines are going to keep coming.”

Regulators want personal devices monitored if policy cannot keep them from being used. They are also moving towards a view of conduct and culture that directly links broader employee behaviours to the specific examples of misconduct contained in market abuse-type regulations. One US official made it very clear to 1LoD delegates that, “I am a big proponent of conduct culture surveillance, particularly in the application of behavioural science techniques, to the surveillance process.”

Banks have no choice to respond. “As we all know the population we mainly look at is those performing regulated activities. But our risks do not stop at that particular population. But our risks do not stop at that particular population. There is a broad spectrum of enterprise-wide risk, including market abuse, but also encompassing unauthorized trading, insider threats in cybersecurity, fraud, sanctions-busting and other financial crime issues and all of those things occur within the firms communication structure. Once you start to look at risk like that, then you start considering, well, what's that population? So, we are evolving and looking at how we can leverage e-comms to make it broader and so more effectively mitigate risk across the organisation,” says one surveillance head.

Attendees at a 1LoD’s surveillance Deep Dive confirmed these views. 69% say that their bank is considering expanding the scope of ecomms coverage beyond Sales & Trading and 69% believe that communication surveillance will encompass the majority of a bank’s employees within the next five years.

Technology vendors see an even bigger role for broader surveillance. Describing what some may view as a dystopian future, one explained, “Among our clients, cultural issues are higher on the agenda and they are prioritising employee conduct in the context of the regulatory requirements around market abuse. So, we are monitoring things like substance abuse, sexual misconduct, racism, the hate sites, because, when there's an investigation, all of these things come up, they bring into question the fitness of the individual. Banks absolutely need that broader view and I'd like to see us move away from market abuse surveillance as a name in the future, and really become a surveillance eyes and ears for the bank. There's just so much that we can pick up.”

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