How Email Archiving Helps in Financial Services Compliance

The financial services sector is one of the most critical sectors in the United States due to its importance in its economic stability and welfare. It is also a highly communicative sector where many business functions require communication extensively to run the business. Therefore, it is also a highly regulated sector and must keep records of all communications for compliance reasons and future use. One such mode of communication that is extensively used by the industry and is highly regulated is email. Most regulations require financial institutions to keep business records for at least five years, including electronic communications like emails and others.

Regulations

Some of the key regulations in the US financial sector are:

Financial Industry Regulatory Authority (FINRA)

According to FINRA, businesses must keep, manage, and recover corporate communications irrespective of when they were performed on a personal or work-related device.

Sarbanes-Oxley Act (SOX)

According to SOX compliance, all public trading firms must keep business records for at least five years, including electronic communications like social media posts, emails, and others. Even though this is a US law, it applies to European companies listed in the US.

Securities Exchange Commission (SEC)’s Rule 17a-4 & 17a-3

According to SEC compliance, all dealer/broker organizations must keep digital communication related to the trading activity for at least six years. The rules also stipulate that the documentation must be kept in easily accessible and indexable storage for the first two years.

Requirements

These and many other regulations were enacted or improvised to prevent situations like the global recession of 2008. Most of these regulations require financial institutions to ensure that:

  • The emails are preserved in their original state by preventing alteration or destruction for future use.
  • The emails are secured from risks, including unauthorized human access, malware, and virus attacks.
  • The emails are auditable by authorized auditors in a convenient and timely manner.

Solution

Financial institutions practice several methods to adhere to these regulations and fulfil the requirements. However, the widely practiced technique is email archiving, which is done in two ways:

  • Journaling
  • Crawling

Journaling 

Journaling is the practice of making a copy of the email sent or received by any user in the company. The copy is made automatically when the email hits the company server and is sent to a dedicated data archiving solution for further review or records keeping. This process is known for capturing 100% of data even before the email could be tampered with or deleted.

Crawling

Crawling is the process of periodically capturing emails and other data such as calendar, folder structure, etc., on a computer. It helps gather information about the items lifecycle from opening to deletion of the emails and how they interact. This process is known for additional insights into the item’s lifecycle, user interaction, and other data.

Benefits

Both the methods of archiving together serve the Federal Reserve’s aim to “safeguard the financial system’s safety and soundness, as well as to establish and enforce consumer protection measures.” Apart from helping companies adhere to financial services compliance, these archiving methods also serve them by helping them:

  • Automatically archive all company emails with the in-line archiving feature
  • Streamline search and record extraction with its advanced search features included within the email archiving solutions
  • Save emails in a read-only encrypted format, ensuring a tamper-proof solution and preventing emails from being accidentally deleted
  • Gain an overview of ongoing business operations, identify, and deter frauds caused by improper trade practices by storing all essential information in one place

Conclusion

Both journaling and crawling have their pros and cons, but together they can benefit companies in many ways. Due to the ever-growing list of regulations and the number of fines imposed for noncompliance, most large enterprises resort to such email archiving solutions for information management.

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