Definition, regulatory expectations, and compliance best practices
Electronic communication refers to any information exchanged using digital channels — including email, instant messaging, collaboration tools, social media, mobile messaging, and more. In regulated industries like financial services, healthcare services, and state and local governments, electronic communications are considered official business records and must be captured, retained, supervised, and produced for regulatory oversight.
What is considered electronic communication?
Electronic communication covers an expanding range of channels, formats, and interaction types, including:
- Email (corporate and personal)
- Collaboration platforms like Microsoft Teams, Slack, Webex
- Mobile messaging such as SMS, WhatsApp, WeChat, Signal
- Social and professional networks like LinkedIn, X (formerly Twitter), Facebook
- Voice and video calls (recorded or transcribed)
- Customer interaction tools like live chat and chatbots
- File sharing, comments, and reactions
- Automated communications including alerts and notifications
Why are electronic communications regulated?
Organizations operating in regulated industries or sectors may need to retain all business-related communications, including those on digital channels.
For example, financial institutions rely on digital channels to interact with customers, execute trades, and conduct business. Regulators require oversight to:
- Protect investors and markets
- Prevent fraud and misconduct
- Ensure fair, transparent financial practices
- Preserve evidence and business records
- Enable rapid response in examinations and investigations
When firms fail to properly manage electronic communications, the result is often regulatory penalties, costly remediation, and reputational risk.
Broker-dealers: Core regulatory obligations
Electronic communications must be:
- Captured and retained under SEC Rule 17a-4
- Supervised for risks, suitability, and misconduct
- Searchable and producible for examinations
- Protected from tampering and unauthorized deletion
FINRA and the SEC have issued multiple enforcement actions against firms that allowed business communications on unmonitored channels, such as WhatsApp or personal devices.
Investment advisers and other registrants
Requirements apply broadly across the investment ecosystem — not only broker-dealers. SEC, CFTC, FCA, and other global regulators expect strong electronic communications governance for:
- Investment advisers
- Swap dealers
- Futures commission merchants (FCMs)
- Asset managers
- Banks and insurers
Global frameworks such as MiFID II, EMIR, and Basel III add additional expectations for recording, reporting, and transparency across regions.
Compliance expectations
Regulated firms must implement governance and controls that ensure:
- Channel coverage: Approved apps for approved business use
- Retention and lifecycle management: In compliance with recordkeeping rules
- Monitoring and supervision: Communications reviewed for red flags
- Data security and privacy: Encrypted and access-controlled records
- Discovery and export: Fast production for regulators or legal teams
These requirements apply whether employees use firm-issued devices, personal phones (BYOD), or hybrid work environments.
Emerging risk areas
Electronic communication risks continues to expand through:
- Short-lived or disappearing messages
- AI-generated content and chatbot interactions
- Video meetings with hidden chat elements
- Shadow IT and unauthorized apps
- Global messaging platforms with variable data laws
Regulators have made it clear: technology may evolve — accountability does not.
Quick compliance checklist
- Have you identified all channels where regulated business takes place?
- Are employees prohibited from conducting business on unmonitored apps?
- Are communications retained in accordance with applicable regulations?
- Are supervisors effectively reviewing communications for risk?
- Can you quickly search and produce communications for regulators?
Even one “no” introduces compliance, enforcement, and reputational exposure.
How Smarsh supports electronic communications compliance
Smarsh provides a comprehensive solution to capture, retain, supervise, and produce electronic communications across all relevant channels:
- Capture 100+ channels including email, chat, mobile, collaboration, social, voice, and video
- WORM-compliant, immutable storage for secure, tamper-proof recordkeeping
- Supervision workflows to identify and escalate regulatory and conduct risks
- Rapid search and e-discovery for examinations, audits, and litigation
- Cross-channel reporting for regulators or internal compliance monitoring
- Vendor and BYOD oversight for hybrid and mobile work environments
By leveraging Smarsh, firms gain full visibility and control over electronic communications — reducing risk and staying compliant as communication channels evolve.
Explore how Smarsh helps firms meet electronic communication capture requirements
Key takeaway
Electronic communication is the backbone of financial services — and one of its biggest compliance risks. Visibility, retention, and rigorous oversight are required to ensure firms remain compliant while adapting to evolving technology and communication channels.