The Securities and Exchange Commission (SEC) has imposed billions in penalties for record-keeping failures in recent years, including $8.2 billion in monetary penalties for fiscal year 2024, setting a record. That said, under the current administration, the SEC’s focus may evolve.  

Financial institutions should not take this as a signal that compliance pressure is easing. Other regulators, particularly FINRA and European authorities under MiFID II, continue to make it clear that communication compliance is a priority, aggressively penalizing firms that fail to maintain proper oversight of electronic communications.  

Regulatory enforcement may shift, but the risks for firms remain high. For firms that assume (or hope) regulators are stepping back, the reality is the opposite: compliance expectations are higher than ever.  

Now that the European Union has implemented significant amendments to the Markets in Financial Instruments Directive (MiFID II) and Markets in Financial Instruments Regulation (MiFIR) in 2024, firms face even greater expectations around transparency and investor protection.  

These updates make it clear that compliance failures—especially in communication oversight—carry serious financial and regulatory consequences on a national and global scale. 

Behavioral Hurdles: Convenience vs. Compliance 

Prohibition of certain platforms like WhatsApp sound simple in theory, but real-world behavior tells a different story.  

In a 2024 survey, nearly 80% employees admitted to bringing their own AI tools. Even with WhatsApp bans, only 50% of firms believe channel bans will stand up to regulatory scrutiny. Without compliance tools that match employee habits, workarounds may persist, exposing firms to risk. 

Without tools that balance compliance with convenience, employees may search to find workarounds, exposing firms to costly oversights. 

Incumbent Solutions: Gaps in the System 

Legacy compliance tools like Global Relay and Smarsh dominate the market.  While they may meet basic regulatory requirements, they also have gaps that impact certain companies such as: 

• Platform Blind Spots – Many fail to capture encrypted and disappearing messages on WhatsApp, Signal, Slack, and Telegram, creating compliance risks for companies where business communications occur on those channels. 

• Fragmentation – Some firms rely on separate tools for capture and archiving, leading to inefficiencies, higher costs, and increased risk of missing key data. 

• Ineffective Searchability – Outdated lexical search methods may flood compliance teams with false positives, creating opportunities for more efficient filtering technologies to improve effectiveness. 

Despite significant investment, these gaps continue to expose firms to costly fines and reputational damage. 

Is Communication Compliance a Big Enough Problem to Solve? Absolutely. 

While financial institutions face mounting regulatory pressure, compliance challenges extend far beyond finance. Healthcare, government, and legal sectors all require monitored communications, making this a massive opportunity for innovation.  

Solving today’s communication compliance woes could create a significant ripple effect across countless end markets. 

We’re looking for: 

Communication Capture 
Are tools appropriately connected to all the relevant communication channels to ensure visibility and oversight? A robust solution would ideally be able to seamlessly ingest data from email, LinkedIn, text, WhatsApp, and other platforms where regulated interactions occur. 

But capture alone isn’t enough – onboarding has to be seamless. If employees struggle to install or enable monitoring solutions, compliance efforts face an uphill challenge before they even start. The easiest to use compliance tools are those that integrate directly into existing workflows with minimal disruption, ensuring compliance without hindering productivity. 

Communication Archiving 
Once a text is captured, the solution must securely store and archive it for the required retention period (which vary by jurisdiction and communication type but may be up to 7 years or even longer). Moreover, it should allow compliance teams to quickly and easily access this data when regulators come calling. To make this process effective, improved searchability is key. 

A truly robust system would ideally offer enhancements that extend beyond basic regulatory requirements such as: 

• AI-driven contextual search to distinguish between different meanings of words 

• Smart filtering and prioritization to surface the most relevant results 

• Automated tagging and categorization to reduce manual review burdens 

• Audit trails and search history tracking to monitor compliance trends over time 

• And cross-channel searchability, allowing compliance teams to search across multiple platforms without conducting separate searches for each channel 

Of course, an even bigger opportunity exists: Prevention. Today’s solutions react after a violation occurs. The next wave of compliance tools may help anticipate and prevent breaches before they happen, assisting firms in compliance efforts beyond the minimum regulatory requirements. It doesn’t exist today, but we believe it will in the near future. 

The stakes are clear: firms need smarter, more seamless compliance tools to help them meet the demands of a rapidly evolving regulatory environment. This is a space ripe for transformation, and the need is urgent. 

If you’re building solutions to capture, archive, or analyze communications—or if you have ideas that could revolutionize compliance workflows—I’d like to hear from you. 

This article is intended solely for informational purposes and does not constitute an offer to sell or solicit an offer to invest in or purchase securities. The views expressed here reflect the opinions of the author and Jump Capital. It should be noted that Jump Capital may have financial interests within the compliance technology sector discussed in this article and may pursue investments in companies within this industry. Any forward-looking statements or predictions regarding regulatory trends are speculative and should not be relied upon for investment, legal, or compliance decisions.