Deutsche Bank Probes Staff’s WhatsApp Use as U.S. Cracks Down

(Bloomberg) -- Deutsche Bank AG is conducting an internal probe into the extent to which staff used private messaging channels such as WhatsApp, amid a crackdown from U.S. regulators on banks who fail to store business-related communication.

Many senior executives have long relied on smartphone messaging services to communicate with each other, clients and other stakeholders, people familiar with the matter said. Those exchanges are part of an internal investigation that the German lender has kicked off to see if staff communications were in compliance with company policies and banking regulation, the people said asking not to be identified discussing private information.

A Deutsche Bank spokesman declined to comment.

Deutsche Bank and the industry as a whole has been on high alert after U.S. financial supervisors in December imposed a fine of $200 million on Wall Street rival JPMorgan Chase & Co. for failing to comply with rules requiring lenders to keep records of staff messages for regulatory scrutiny. Since then, HSBC Holdings Plc, Goldman Sachs Group Inc. and Citigroup Inc. have also said they're included in the industry-wide investigation.

Banks have been required for decades to closely monitor and save their employees' business communications but the proliferation of mobile technology and messaging apps has complicated the task.

Deutsche Bank's internal probe comes amid mounting signs that the lender has been clamping down on employees' use of private communications. In January, Chief Executive Officer Christian Sewing announced a probe into reliance on private email accounts, and issued an internal memo shortly after that warned staff not to delete business messages sent through private channels, Bloomberg has reported. The bank is also working on a new solution to improve storage of WhatsApp messages on company phones.

The bank already offers software that allows staff to use messaging apps in a compliant way, so the use of such platforms isn't on its own evidence of a rule breach.

The communications issue adds to a list of legal and regulatory headaches still facing Sewing despite a years-long effort to fix the lender's controls and improve relations with bank supervisors in Europe and the U.S. Among other things, Deutsche Bank has been rapped by the Federal Reserve and the German financial watchdog BaFin over insufficient anti-money laundering procedures, its asset management unit DWS is facing claims it overstated its sustainability efforts, and the investment banking division is fighting a lawsuit that it mis-sold foreign-exchange derivatives.