Three Compliance Vulnerabilities Affecting Remote Workforces and How to Address Them

September 02, 2020by Elin Cherry

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In the months since the COVID-19 pandemic began, businesses have worked hard to make sure their remote workers are connected and motivated. Organizations have relied on technology to bridge the gaps created by decentralizing staff.

This pivot to a virtual business model has created challenges, especially for compliance staff. These teams are charged with making sure remote employees follow the rules and regulations that are a reality in the financial services industry. And while every regulated organization may face unique compliance challenges, many of the risks fall into three general areas.

Compliance workers should make sure their organization’s employees are especially mindful of the rules regarding electronic communications, outside business activities and personal trading.

Electronic communications

With little opportunity to speak to each other in person, workers have had to rely on email, texts, phone calls and teleconferences to communicate. My company and every one of my clients has seen a sharp increase in the volume of electronic communications that are generated every day. Because they are so convenient, the number of teleconferences, on Zoom, Microsoft Teams or other systems, has soared. These help maintain face time with customers and colleagues and keep business running.

However, it’s important to be aware that this change in the way we are communicating brings several risks:

  • Your existing retention and supervision procedures and resources may not be adequate to handle the larger increase of electronic communications that need to be scrutinized for compliance purposes.

  • Your workers may not be aware that electronic communications from teleconferences on systems such as Zoom need to be stored and reviewed. While telephone calls are considered verbal communications and do not need to be maintained, teleconference systems that offer a chat function — where participants can comment in writing — do need to be checked for compliance.

  • Chances are greater that workers will use their personal devices for work-related calls and communications, whether intentionally or not.

Outside business activities

Working from home creates the opportunity for workers to do things that they couldn’t do in the office. Most are household related, such as the laundry or running an errand.

But some employees may see working at home as an opportunity to do other work — whether for themselves or for others. This may be especially true for those who are concerned about their jobs or the company’s health.

Employees must be aware that these outside activities need to be reported to the company and checked for compliance.

Personal trading

Stock markets have seen large increases in volatility and volume since the lockdowns started. Major U.S. brokerages reported seeing the number of new accounts and trades jump as individuals at home during the day engage more in the markets.

With the surge comes the higher risk that an employee may become involved in insider trading or other transactions that do not meet compliance regulations. And it’s not just the employee — spouses and housemates could gain access to information that they shouldn’t and use it inappropriately.

Steps to protect your organization from compliance issues

While the risks have increased, there are several steps you can take to help prevent your employees and company from running afoul of compliance. These are my recommendations:

1) Assess your current compliance procedures and resources and adjust them as necessary. You may need to conduct more reviews or do them more often. Consider increasing compliance staff or outsourcing some functions to a firm that specializes in compliance.

2) Hold compliance reviews with your employees to remind them of the proper procedures that need to be followed. In particular, they should be made aware regularly about the restrictions on personal devices and outside activities.

3) Plan to review your compliance procedures on a more frequent basis the longer your workforce remains remote. If long-term remote work is new to your firm and your staff, revisions to your compliance procedures will be important in the months to come.

We all want our workers to stay safe during this health crisis. But it’s equally important that we protect their jobs by ensuring that our organizations prioritize compliance.

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Elin Cherry
Smarsh Blog

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