United States: The ‘Wechat Effect': Understanding The Compliance Risks Of Mobile Messaging Apps

Last Updated: March 11 2019
Article by Danforth Newcomb, Brian Burke and Caitrin McKiernan

Instant messaging apps such as WeChat, WhatsApp and QQ are having a profound impact on the way people communicate around the world. In Asia, where the adoption rate of such technologies has been nothing short of astounding, instant messages are already surpassing email as the primary mode of work communication. These mobile communication tools offer significant benefits, but they also open the door to serious compliance and regulatory risks, many of which have never been encountered previously. This article outlines the rapid rate of adoption of such apps, surveys the resulting risks, discusses the views of US regulators and explores practical ways that companies might mitigate these risks.

The numbers

By the third quarter of 2018, there were 1.3 billion monthly active users of Facebook Messenger and 1.5 billion monthly active users of WhatsApp globally. WeChat, which is mostly used in China, has hit more than 1 billion active monthly users, most of whom have joined in the last seven years, according to Statista.

The risks

Employees are increasingly using these apps to communicate about business matters, creating serious compliance risks in at least four areas, as outlined below.

Data security. A company may spend millions to build a state-of-the-art network, yet employees repeatedly send sensitive and confidential business information over unsecure networks and personal messaging accounts. Among other things, this also means that when an employee leaves a company, he or she may take sensitive company data stored on his or her phone. He or she may also remain in work chat groups, and therefore may continue to be privy to messages containing proprietary information.

Off-the-book transactions. Many off-the-book transactions occur through mobile payments made on personal phones. This is particularly true in China, where cash is becoming obsolete, and WeChat is king.

Recordkeeping. Information transmitted via mobile messaging apps is hard to preserve and reproduce. For example, in China, the 'M&A deal team' is now a WeChat group, and deal documents are frequently exchanged via the app.

Audits and investigations. Key correspondence and evidence for conducting audits and internal investigations is now outside of the company's reach unless voluntarily provided by an employee or third-party whistleblower.

To compound matters, many companies have bring your own device (BYOD) policies, meaning that mobile phones are not company property and cannot be copied without individual consent. As a result, often the most valuable sources of evidence in an internal investigation – messages transmitted over mobile messaging apps – are not available unless voluntarily provided.

The US regulator's view

In November 2017, the US Department of Justice (DOJ) announced the FCPA Corporate Enforcement Policy, which extended and enhanced the FCPA Pilot Programme by permitting a company that voluntarily self-reports, cooperates and remediates to be eligible for a declination, unless certain aggravating circumstances exist. Notably, the policy appeared to include a serious caveat with respect to mobile messaging apps. As part of any declination-worthy remediation, a company must enact the "[a]ppropriate retention of business records, prohibiting the improper destruction or deletion of business records, including prohibiting employees from using software that generates but does not appropriately retain business records or communications". In other words, the policy appears to suggest that a company that fails to enact a mobile messaging policy may forego a declination.

Then, in public remarks in March 2018, David Johnson, assistant chief of the DOJ Criminal Division's Foreign Corrupt Practices Act (FCPA) unit, appeared to take a step further, encouraging companies to act now: "I would urge you to think of that right now, as opposed to having to deal with it in hindsight when records do not exist and you're trying to make a pitch to the Department of Justice, or SEC or a foreign authority about why it's not unreasonable [that certain records were not retained] ... [Companies may consider] whether it makes sense for employees to be able to use those types of services and if so under what circumstances, and whether there need to be prophylactic measures or workarounds put in place consistent with the compliance policy."

To date, the DOJ has not, however, provided guidance on the kinds of prophylactic measures or workarounds that are appropriate or practical.

Practical tips

Against this backdrop of uncertainty, below are seven practical steps companies may consider.

First, check and update internal policies to determine whether they explicitly address the use of instant messaging for company communications. If they do not, revise the policies or add an addendum that specifically addresses this issue. A blanket prohibition may not be necessary or practical, but certain communications should be strictly prohibited, for example sending company data or documents via WeChat.

Second, ensure that compliance training and materials appropriately address the use of mobile messaging apps.

Third, encourage employees to use corporate versions of messaging apps, such as Skype for Business, Enterprise WeChat, Google Hangout and Slack, which allow data to be preserved.

Fourth, consider issuing company mobile phones, containing pre-installed enterprise apps, to all employees, or at least a select group in higher risk positions.         

Fifth, require employees to run redundant instances of mobile messaging apps on company servers in order to capture and retain communications. A small number of service providers have developed such software solutions, such as Actiance and Dynatrace.

Sixth, require employees to upload mobile messages to company servers on a regular basis, for example  once a week. This could, for example, be part of the job description of a particular member of an M&A deal team.

Finally, during internal investigations, ask employees to provide any evidence they may have on WeChat or other messaging apps. In addition, add search terms referencing mobile messaging to any email review.

Originally published by Financier Worldwide Magazine

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions