Fine them or fire them?

The recent news that Morgan Stanley was fining bankers up to $1 million for breaching compliance rules around WhatsApp and other messaging platforms to communicate official business has raised eyebrows in the surveillance community.

The idea is not new, though the scale of the clawbacks did surprise some people. Surveillance professionals spoken to by 1LoD say that at institutions they have worked in there have been links between pay / bonuses and various measures of engagement with compliance or other specific non-financial risk management targets. However, none could recall fines for such specific non-financial risk policy breaches – such as in this case.

According to one report, the latest round of penalties uses a system that considers points, which are meted out according to the number of messages sent, the ranking of the banker and whether they had previously made the same mistake. The fines have been docked from previous bonuses or will be pulled from upcoming pay packages.

But is it a good idea? One regulator told 1LoD that while they had no position one way or the other on the concept of fines, there would be a concern that any short-term benefit would be outweighed by a longer-term move to a culture of “hide and don’t tell”.

Surveillance professionals were mostly sceptical. If compliance is already seen as a tax on the business, then anyone wanting to do wrong would probably view this kind of progressive fine regime in a similar way. In fact, perversely it gives them a way to calculate the potential cost of transgression versus the potential profit.

And it doesn’t solve the core problem of why most of these types of policy breach occur: banks and regulators need to come up with workable solutions to providing workers in financial services with the same modern communications tools as their clients use.

But perhaps the most obvious point came from a 20-year surveillance veteran. “I can see that it makes some sort of sense. But this idea that there is a sliding scale of wrongdoing that simply results in bigger and bigger fines is a bit odd. If someone breaches a policy that you consider that important, why not just fire them?”