Is LinkedIn the Next Big Risk in Financial Communications Compliance?

In the fast-paced realm of digital communications, it is of utmost priority for compliance teams to proactively anticipate potential risks. The widespread shift to remote work prompted by the pandemic has led employees to rely on various digital communication channels to stay connected. This trend has posed a challenge for compliance teams in effectively identifying and addressing potential risk areas.

Financial regulators universally mandate firms to capture and record all business communications, irrespective of specific regulations. The implementation of the U.S. Securities and Exchange Commission’s (SEC) Marketing Rule has emphasised the necessity for updated legislation overseeing advertising on social media and websites.

As regulatory attention turns towards digital communication channels, LinkedIn has become a particular focus of scrutiny. Initially designed as a professional networking tool, the platform has expanded its scope to include recruitment and sales, as well as business communication. This multi-faceted nature subjects LinkedIn to various avenues of regulatory scrutiny, as well as potential compliance gaps.

A recent study has revealed that LinkedIn is the second most captured communication channel for financial institutions, indicating the significant percentage of accounts that utilise the platform. However, the breakdown of this data suggests potential gaps in compliance, with only 26.2 per cent of accounts capturing both employee and company account data.

The relatively low capture rate for LinkedIn raises concerns about potential compliance risks, particularly regarding illicit and marketing communications. With the potential for regulatory scrutiny and the lack of comprehensive solutions to mitigate these risks, LinkedIn could potentially become the next looming compliance crisis in financial communications.

As businesses navigate the challenges of digital communications compliance, it is crucial to recognise the implications of inadequate risk mitigation strategies. Proactively addressing compliance risks associated with LinkedIn and other digital communication channels is imperative to uphold regulatory adherence and safeguard the integrity of business communications.

Author: UK Finance