On Thursday, US regulators levied civil penalties on divisions of Bank of Nova Scotia and HSBC Holdings Plc for significant recordkeeping breaches caused by employees’ utilisation of personal devices and applications for business interactions.

The banks acknowledged to failing to comply with recordkeeping requirements for dealers registered with US market authorities.

HSBC Securities Inc agreed to pay a $15 million settlement to the Securities and Exchange Commission (SEC). Scotia Capital agreed to pay a total of $22.5 million: $15 million to satisfy Commodity Futures Trading Commission charges and $7.5 million to settle Securities and Exchange Commission penalties.

Since regulators initiated a sweeping investigation into the use of such platforms in 2021, HSBC and Scotiabank have become the latest Wall Street firms to face penalties for workers’ usage of personal smartphones and chat applications. In September, more than a dozen banks agreed to pay a total of $1.8 billion for such infractions.

“In recent years, we have made significant investments in enhancing our compliance procedures and have worked diligently to maintain the highest standards for professional conduct throughout our organization,” an HSBC spokesperson said.

A Scotiabank spokesperson said, “We are committed to conducting our business according to the most current high standards of business conduct and adhering to all regulatory requirements, including the use of approved communication channels for business purposes.”

According to the decision, the CFTC discovered that Scotiabank workers, including senior management, utilised off-channel communications like text messages and WhatsApp throughout its inquiry.

Investigators from the SEC discovered “pervasive and longstanding use of off-channel communications” at both companies. According to the decision, both banks informed the SEC’s enforcement team of the flaws and had proceeded to correct them.

Brokers, swaps dealers, and financial advisers who are registered with the authorities must preserve records. Regulators have become more worried about dealers’ usage of personal devices, claiming that failing to keep records can stymie monitoring and probes into alleged illegality.

(Adapted from TheGlobeAndMail.com)