Compliance fundamentals: Communications surveillance

KEY TAKEAWAYS

How do financial firms ensure they have robust supervisory processes and procedures for communications monitoring? This guide explores financial services communications surveillance and how Bloomberg Vault helps firms monitor communications to meet regulatory expectations under global regulatory frameworks.

This article was written by Bloomberg Intelligence Compliance analysts Eugene Semetsky and Polly Abreu.

Communications surveillance is a core component of compliance and risk management in the financial industry. It refers to the systematic supervision and review of business communications to detect and mitigate misconduct, market abuse, and other risks. Regulators in major jurisdictions expect firms to implement compliance programs that capture, archive, and supervise communications.

However, meeting these expectations is far from simple. Surveillance requirements continue to evolve alongside new communication channels, technologies, and regulatory interpretations. In recent years, global regulators have levied more than a billion dollars in fines against financial firms for failures in monitoring employee communications, a stark reminder that lapses in supervision can carry significant financial, legal, and reputational consequences.

This article explores what surveillance is, why it matters, and how regulators set principles-based expectations.

What is communications surveillance in financial services?

Communications surveillance is the systematic monitoring and analysis of business-related communications to detect, assess, and address potential misconduct, market abuse, or other compliance breaches.

In financial services, it is a core regulatory and governance function that ensures communication linked to financial transactions or advisory activity is properly captured and reviewed in accordance with applicable rules.

Effective surveillance helps firms:

• Identify and mitigate misconduct and market abuse risks
• Ensure adherence to internal policies
• Demonstrate compliance with external regulatory standards

How communications surveillance compares with communications archival

Although closely related, communications surveillance and communications archival serve distinct but complementary functions within a firm’s compliance and supervision framework.

• Capture, recordkeeping, and archival:
  This is the process of collecting and retaining all in-scope business communications for a specific period required by regulations. These records form the foundation of market integrity and investor protection, ensuring that firms can demonstrate what was said, when, and by whom.Robust capture and archival systems allow internal teams to reconstruct events, investigate issues, and respond effectively to regulatory inquiries. They enable regulators to request and review historical communications during examinations or enforcement actions.See our related blog on capture and archiving for more detail.
• Surveillance:
  Surveillance goes beyond record retention. It involves proactively monitoring and analyzing captured communications to detect and mitigate potential risk. Surveillance frameworks apply lexicons and AI models to identify potential risk indicators of market and non-market conduct violations. Alerts generated through surveillance are investigated and, if necessary, escalated to support remediation and regulatory response.

In essence, archival provides the record, while surveillance provides the insight. Together, they enable firms to not only preserve communication history but also interpret it.

What communications need to be supervised?

Across major jurisdictions, the scope of communications surveillance generally applies to approved communication channels that regulated firms’ employees (individuals whose role, responsibilities, or activities fall within the scope of financial-services regulations) use to conduct business-related activities.

Surveillance must ensure that all approved communication methods are monitored in accordance with regulatory expectations. This can also include monitoring attempts by a firm’s users to switch an unapproved communication channel.

This may include:

• Email: Internal and external communications containing business-related content.
• Enterprise chat and collaboration tools: such as Microsoft Teams, Slack, and Symphony that facilitate real-time exchanges of information.
• Voice and video conferencing: Recorded calls and meetings where trading activity, client instructions, or investment discussions may occur.
• Mobile messaging: Texts, multimedia messages, emojis, and app-based communications containing business-related content.
• Social media and digital platforms: Posts, direct messages, or comments made in a professional capacity that could influence or relate to market activity.

The goal is to ensure that all in-scope business communications, regardless of format, device, or location, are subject to consistent monitoring and oversight.

Unapproved or “off-channel” communications, meaning any business-related messages sent or received on that the firm has not approved or cannot capture, retain, or surveil, present a significant compliance risk because they fall outside of the firm’s supervision and retention systems.

Regulators across major jurisdictions have emphasized that firms are accountable for ensuring employees conduct business only through authorized and captured channels.

Why communications records matter: understanding context behind trading activity

Communications records capture the context behind trading and investment activity. In financial markets, understanding that context is critical. Surveillance of communications allows firms to see not only whether misconduct has occurred, but also why certain actions took place, distinguishing between legitimate and suspicious behavior.

Revealing context and intent 

Communications surveillance helps firms understand the context behind trading and investment activity, uncover potential misuse of information, and monitor behavioral and cultural risk. By analyzing what was said, when, and by whom, surveillance provides a fuller picture of conduct across the organization.

It helps to:

• Investigate whether a discussion about a specific instrument, company, or asset class occurred shortly before a favorable trade.
• Detect the potential leakage of material non-public information (MNPI) related to events such as IPOs, earnings releases, or mergers and acquisitions.
• Determine whether a flagged trade was supported by legitimate, documented reasoning rather than undisclosed or privileged information.
• Monitor communication flows across information barriers (for example, between investment banking and trading teams) to confirm that confidential deal information is not shared inappropriately.
• Detect cultural or conduct indicators, such as aggressive tone, coercive language, or exclusionary behavior, which may signal broader compliance or governance issues.

These insights enable compliance teams to distinguish between legitimate and nefarious activity, assess the effectiveness of internal controls, and identify early warning signs of misconduct that might not appear in transaction data alone.

Supporting information barriers and restricted lists 

Communications surveillance serves as a critical control mechanism for managing information barriers within financial institutions. Firms handling sensitive, non-public, or confidential information must ensure that such information is not shared. Effective communications surveillance helps:

• Monitor interactions between teams that handle restricted or confidential information and those that do not.
• Detect breaches of information barriers, whether intentional or inadvertent.
• Validate adherence to restricted lists, ensuring that employees with access to MNPI are not communicating about affected securities.
• Provide an auditable trail demonstrating how confidential information is controlled and monitored across the firm.

By tracking communication flows, firms can confirm that appropriate separations are in place and that controls around MNPI are functioning as intended. This oversight supports both regulatory compliance and internal governance.

Regulatory requirements for communications surveillance

While regulatory rules governing recordkeeping tend to be highly prescriptive (what must be captured, for how long, in what form), rules for communications surveillance are intentionally principles based. The rules require “effective controls”, for example, preventing off-channel use, recording in scope activities, and conducting risk-based review, but they do not mandate a single ‘right’ way to supervise communications.

This technology neutral approach lets firms tailor controls to their business model, risk profile, and legal environment, while ensuring regulators can test outcomes through examinations and enforcement.

• Technology neutrality and pace of change: New channels (e.g., chat apps or collaboration tools) emerge faster than rulebooks can be rewritten. This is why regulators are more likely to focus on outcomes (e.g., effective arrangements, systems and procedures) rather than on specific technologies or lexicons.
• Proportionality to business model and risk: Certain regulators believe supervision should be “appropriate for the member’s business, size, structure, and customers,” as FINRA puts it, so a small advisory firm and a global dealer shouldn’t be forced into the same surveillance playbook. This is explicit in FINRA Rule 3110 and implicit across EU/UK rules via principles like “reasonable steps” and “effective arrangements.”
• Avoiding vendor or method endorsement: If regulators mandate specific lexicons, sampling rates, or systems, they are effectively endorsing technology and creating “tick box” compliance. By focusing on outcomes, supervisors keep firms accountable for results.
• Interplay with privacy and data protection laws: Global surveillance requirements are sometimes in tension with regional data privacy regimes. A monitoring practice that’s permissible in one jurisdiction may breach privacy restrictions in another. By keeping surveillance rules principle-based, regulators enable firms to calibrate their programs to local legal and cultural expectations, balancing effective supervision with lawful data handling.

Conclusion

Communications surveillance complements capture and archival by turning records into insight. It helps establish context around trading and advisory activity, support information barriers, and provides oversight.

Regulatory frameworks are technology neutral and outcome focused, emphasizing complete capture of in scope channels and risk-based supervisory review. Because expectations are principles based, program design varies by business model, risk profile, and legal environment, but effectiveness is assessed by results.

How Bloomberg Vault supports communications surveillance   

Bloomberg Vault provides multi-channel record-keeping and proactive surveillance across global communications, integrating chat, voice, and email data. Vault offers expert service from setup to ongoing optimization.

• Vault connects chat, voice, and email data across regions and channels, so that information is seen in context and so firms gain a consolidated view of their communications universe.
• Vault’s unique real time preventative controls for Bloomberg IB and Bloomberg Message allow firms to detect and potentially stop risks before they occur, transforming surveillance from a reactive to proactive approach.
• Built on Bloomberg’s proven technology foundation, Vault delivers resilience, scale, and data integrity.

Learn more about Bloomberg Vault here.