The Cartel Forex Scandal

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In an era where people use smartphones for everything, chat groups and online messaging apps have become the most preferred day-to-day and business communication methods. For years, traders of financial institutions have been continuously using instant messaging solutions gaining huge benefits in connecting with customers.

However, these same online messaging services have brought numerous challenges for financial regulators in maintaining market stability and integrity because so far, many traders have been found misusing them for illegal activities. Regulators, therefore, require that financial institutions take all electronic communication channels under their scrutiny to help combat financial crimes at all levels.

To elaborate more, despite the business value the online messaging platforms have brought into financial institutions, they have caused several banks to pay millions of dollars in fines for violating mobile compliance regulations. For instance, the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) fined JPMorgan Chase & Co approximately 200 million US dollars for non-compliance in record-keeping rules related to WhatsApp messages.

Even though such huge financial penalties and reputational damages have severely impacted the banks, it has not stopped them from involving in major scandals. The Cartel Forex (foreign exchange) Scandal is one of the best examples that shows how emerging electronic communication channels can cripple the financial market. At the same time, they help continue the business operations even during major crises like the coronavirus outbreak.

cartel forex

Cartel Forex Scandal: How traders used online chat groups for manipulating Forex rates for decades

In the Cartel Forex scandal, traders from several banks were accused of using online chat groups for manipulating Forex rates for financial gains for many years. According to the news reports related to the scandal, regulators have gone through thousands of chat records and discovered that more than 200 chat rooms had been involved in this Forex rate-rigging case revealing how major banks colluded for this scandal for almost a decade. Consequently, investigators have taken many enforcement actions on big banks such as JPMorgan Chase, Barclays, and Citigroup.

During this scandal, the traders have taken the best use of some of the privacy features of the chat groups as well. For example, it has been revealed that some of the instant chat rooms traders have used to communicate only lasted for a few hours, enabling them to destroy the price rigging conversations within such chat groups. However, they also have used permanent chat groups. Not only instant chat rooms but also the accused traders have used WhatsApp messages, emails, and telephones, which confirm that traders can misuse any digital communications channels for personal gains.

Furthermore, when digging through the chat groups used for the communications, regulators have found a specific chat group named ‘The Cartel or The Mafia,’ which some powerful traders in London were using, and the membership was in high demand. Regulators also revealed that the members of this exclusive chat group included a former senior trader from the Royal Bank of Scotland (RBS) who later became the head of spot foreign exchange trading in JPMorgan, the head of European spot trading in Citigroup, another senior trader worked in Standard Chartered Bank and the head of voice spot trading at Barclays bank.

Traders from several major multinational banks were accused of manipulating Forex benchmarked currency rates from 2003 to 2013, resulting in trillions of dollars of financial impact for the Forex market. The banks that became the culprits of this scandal were said to have conspired to carry out this for a long time and now face the consequences of their actions. For example, in 2020, the US law had approved a lawsuit against 15 multinational banks for the Forex rigging scandal.

Regulators have found 15 banks involved in this scandal, including JPMorgan Chase, HSBC, Barclays, Goldman Sachs, Lloyds, Standard Chartered, and RBS. These banks later suspended or placed the senior traders involved in this case on leave, and some banks also fired some other employees involved in this scandal.

This is not the only time some of these banks were involved in price rigging incidents. They were already facing charges by regulators on market manipulation incidents. For example, in 2019, some banks, including JP Morgan and Barclays, had to pay a fine of 1.3 billion US dollars to the European Union antitrust regulator due to a probe in two chat rooms. Also, many banks reportedly have paid a fine of around $11.8 billion for several regulators worldwide and $2.3 billion as compensation to customers and investors.

How TeleMessage mobile archiving solutions help financial firms to combat market manipulations?

The Cartel Forex Scandal warns all the financial firms taking advantage of online chat rooms and other messaging platforms for business communications. Firms need to be vigilant about their usage throughout the firms by monitoring the work-related communications. It ultimately brings out the need to have a proper solution for monitoring and archiving electronic communications to help banks identify potential misuse of digital communication products and proactively avoid such scandals happening in the future.

TeleMessage offers a mobile archiver, a robust mobile archiving solution that can capture voice calls, monitor txt messages, and store the captured data in secure servers where regulators can easily search and retrieve the data for any regulatory requirement. TeleMessage mobile archiver consists of archiving solutions for instant messaging apps such as WeChat, WhatsApp, Signal, and Telegram, which works as their standard messaging application. It allows businesses to comply with different text messaging archiving regulations and calls archiving requirements like SFC archiving and FOIA archiving requirements.

Financial firms can use TeleMessage WhatsApp Capture to enable employees to use WhatsApp while complying with mobile compliance regulations. It can archive WhatsApp communication on iOS and Android devices and works on WhatsApp mobile app, WhatsApp Web, and WhatsApp Desktop versions. One of the most important capabilities of mobile archiving solutions is their ability to separate business text and personal messages, keeping the private messages’ privacy intact.

About TeleMessage

TeleMessage offers employees the freedom to use modern messaging applications on the mobile and desktop. Our mobile archiving products securely record content from mobile carriers and mobile devices, letting companies meet recordkeeping regulations and compliance requirements.

With multiple archiving solutions, you can always find the right tools or blend for your requirements:

TeleMessage offers cross-carrier and international mobile text & calls capture and archiving for corporate and BYOD phones. Visit our website at www.telemessage.com to learn more about our mobile archiving products.

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