The humble email it a vital part of every type of business including financial services. It is the basis of our communication systems, used for handling sensitive information and important documents, as well as being a cornerstone of relationships with colleagues and customers alike. In the financial services industry, the email we rely on every day is a vital cog in the business continuity and communication machine. These financial sector emails are highly regulated and must be archived, audited, and deliver an evidential audit trail in the event of litigation.
Such a heavily regulated industry as financial services needs a solution that delivers fast, easy to use, and effective email archiving.
Email plays a central role in transactions both within and external to a financial service institution. This fundamental communication channel comes under several regulatory watchdogs; some are global and some local to the jurisdiction of the business.
Here are some of the most important regulations and where email archiving for financial services and financial planners fits:
FINRA 11-39: Firms must retain, supervise, and retrieve business communications from personal and work-related devices.
FINRA Rule 3110.09 (Retention of Correspondence and Internal Communications). “FINRA and SEC rules do not prohibit the use of non-firm email systems or accounts to conduct firm business provided that the firm captures and retains the emails as it would with emails emanating from its own email system or account.”
SEC Rule 17a-4: Instantiates record-keeping rules for broker-dealers, such as financial planners, and includes the archiving of copies of records (e.g., emails) “necessary or appropriate in the public interest, for the protection of investors or otherwise in furtherance of the purposes of the Exchange Act.”
SOX section 802: All public trading companies must keep business records, including electronic communications such as emails, for at least 5 years. The regulation carries heavy penalties for non-compliance “penalties of up to 20 years imprisonment for altering, destroying, mutilating, concealing, falsifying records, documents or tangible objects with the intent to obstruct, impede or influence a legal investigation.”
MiFID governs financial organizations in the European Union. The regulation specifies that financial advisors and corporate brokerage firms must record all electronic communications including email, social media, instant messaging, telephone calls, etc. Records must be kept for 5-7 years.
As well as meeting the requirements for numerous financial service regulations, email archiving also offers further benefits to financial services companies and financial planners:
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A 2019 study found that 96% of organizations experienced an IT outage in a 3-year period. Lost emails and email downtime hits the communication channels of the financial service sector hard, resulting in loss of productivity, financial costs, and loss of customer trust.
Email archiving is an important part of a wider business continuity and disaster recovery plan and strategy.
A survey of 500 finance and treasury professionals from the Association for Financial Professionals found that in 2020, 62% of companies experienced attempted or actual payment fraud initiated by BEC.
Digital Shadows, in a study focusing on financial services in the UK, identified 33,568 finance department email addresses exposed in its data breach repository. Data losses from cyber-scams and cyber-attacks are common in all industries, including financial services. As well as sending a financial service institute into non-compliance, compromised emails can be part of a BEC scam.
Scams such as BEC can have a far-reaching impact but can be prevented using email archiving for financial services. Archived emails can be quickly searched to check for unusual email transactions, such as an updated bank account associated with a lost payment.
A study found that 93% of customers would likely choose a rival provider if they had a negative email experience, e.g., missing an email receipt, etc.
Email archiving for financial services provides a mechanism to track and audit email exchanges and use these data to improve the overall customer email experience.
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Fines for non-compliance associated with financial service regulations can be onerous Fines and even prison sentences are not uncommon. A well-known example is Morgan Stanley who was fined over $10 million in 2006, by the SEC. The company was found to have destroyed or delayed the handover of emails.
Email archive solutions for financial service providers deliver a full audit trail of searchable emails that can be used to meet financial regulations.
Email archiving system must provide, as a minimum, the following:
Financial service email archives provide an important audit trail. Financial advisors and financial planners must follow the regulations on record-keeping, which includes email retention. Email archiving solutions such as ArcTitan, offer the rich functionality needed for financial services to adhere to these regulations. Email archiving also future proofs against scams such as BEC and forms part of a wider disaster recovery and business continuity strategy. Email archive functionality, including eDiscovery, to search and retrieve emails provides the much-needed compliance with regulations and helps avoid penalties for non-compliance.
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