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Monday, May 16, 2022 - Deutsche Bank gets WhatsApp information request from regulator
Deutsche Bank
Source - https://www.bloomberg.com/news/articles/2022-05-16/deutsche-bank-gets-whatsapp-information-request-from-regulator
Where - Germany
Business line - Corporate Services
Copyright © Bloomberg (www.bloomberg.com) 2022

Deutsche Bank AG has been asked by one of its key supervisors to clarify how its staff use private messages for business purposes as regulators worldwide seek to curb the practice.

German financial watchdog BaFin is following up on indications that senior Deutsche Bank executives including management board members have been relying on messaging tools such as WhatsApp and private email accounts to conduct business, people familiar with the matter said. Bafin has asked the lender to provide information about how its employees use the communication methods to determine whether it has been in compliance with banking rules, the people said, asking not to be identified discussing the private matter.

BaFin’s information request comes amid industry-wide scrutiny from US regulators. It also adds to the regulatory headaches that have built up for Deutsche Bank’s Chief Executive Officer Christian Sewing, although he has spent billions of dollars trying to fix the bank’s controls and improve relations with supervisors since assuming his role four years ago. While the CEO has drawn a line under several big litigation risks, new issues keep cropping up and some proxy advisers are recommending shareholders withhold approval for the lender’s leadership at the annual general meeting on May 19.

Sewing himself has used WhatsApp in the past to communicate on issues related to the lender. At one point, he swapped messages with the German businessman Daniel Wruck, whose role in business deals involving Deutsche Bank and its investment arm DWS is now being probed by German investigators, the people said. That exchange was first reported by the Financial Times.

“We do not comment on our dialog with regulators,” a Deutsche Bank spokesman said by email. A spokeswoman for BaFin declined to comment.

Deutsche Bank has been clamping down on communications through private messaging tools since the beginning of the year. It has launched an internal investigation after the use of private emails by DWS CEO Asoka Woehrmann, attracted scrutiny, and it recently reminded employees that they shouldn’t delete business-related WhatsApps, Bloomberg News has reported.

The German lender has also begun rolling out a new technical solution that improves oversight of communications through private channels by recording and archiving conversations, one person said, confirming a previous Bloomberg story. The pilot program kicked off in late April and the software has been installed on the devices of 1,750 client-facing staff in the US, the person said.

Deutsche Bank “responded at an early stage to indications that private short message services were being used for business communications in the industry and the board immediately initiated measures to ensure, in particular, the proper documentation of business transactions and compliance with retention requirements,” it said in a statement provided to Bloomberg. “We already started implementing technical solutions that enable employees to use short messages with cell phones for business communications in a better, more up-to-date manner and in line with legal requirements.”

US financial supervisors in December slapped $200 million in fines on JPMorgan Chase & Co. for failing to comply with rules requiring lenders to keep records of staff messages for regulatory scrutiny. Goldman Sachs Group Inc., HSBC Holdings Plc and Citigroup Inc., have since said they are being probed by US regulators over staffers’ communications as well.

Swapping business-related messages through communication tools like WhatsApp or private email accounts can violate banking rules because regulators typically require lenders to archive the exchanges in case they need to review them at a later stage. Many banks have been struggling to strike a balance between that requirement and the popularity of messaging apps among staff, including at the highest levels of management.