The Data Debacle Around Investor Due Diligence

Maintaining coherent tax data across the enterprise in a fungible manner allows for vast improvements in the compliance process. All required data must be immediately accessible across the enterprise.

Onboarding a new investor requires gathering a deluge of data, including Protected Personal Information (“PPI”). Obtaining this data is usually a manual process, and it often sits within siloed, antiquated systems separate from the financial books and records. Working to extract this data turns into a debacle. So, what is a financial institution supposed to do when it comes to due diligence for global tax and compliance requirements? An administrative burden ensues, with paper subscription agreements and the manual re-keying of information. This in turn affects the investor’s experience, with a real impact on client-facing relationships.

It’s no surprise that firms strive to keep timely, correct, and coherent data safe, along with the necessary permissions for easy access. Tax and compliance solutions of the past were not designed to interact with each other or plug into additional internal systems, including books and records or customer relationship tools. All these solutions stored and handled similar data in disparate ways.

Providing an integrated subscription document solution and moving to a centralized platform is imperative to get high-quality PPI out of automation. High-quality data identically maintained is the first and largest hurdle to efficiently opening an investor account. PPI fields must be designed from the ground up to be consumed across the entire enterprise, not just during account opening. A fresh look at how PPI is consumed can eliminate manual intervention and allow staff to concentrate on legitimate breaks in information. Existing data still must periodically be reviewed but an integrated process can share new or additional information as it is received by any part of the organization and minimize the need to inconvenience the account holder for items previously provided.

Maintaining coherent tax data across the enterprise in a fungible manner allows for vast improvements in the compliance process. For instance, having an account name match the tax form and AML/KYC documentation during onboarding eliminates the need for manual review. That in turn eliminates unnecessary communication with the account holder, and the additional documentation of the resolution. All required data must be immediately accessible across the enterprise. The account holders should also be provided visibility and easy secure access to their PPI. Permitting the outside user to assist with his or her own documentation makes the entire process easier to complete, though the solution needs to have controls in place to promote the data coherence. Allowing account holders or vendors to enter or update their own information improves their experience and the timeliness of the data.

Providing visibility to existing information reduces the number of minor discrepancies that could be introduced during subscription. Prepopulating or showing account holders the addresses on their tax forms while they fill out the account opening documentation for an additional account makes it less likely that a small difference in the address would be recorded. If the address is incorrect for any reason, the change should filter through to all records once the change is confirmed.

The goal is not to force all your data to meet a specific need, but to keep it all in a coherent fashion, so that only meaningful changes are made. Then the information can be used for all the required processes without requiring manual intervention. People will still play a vital role in the process, but for more value-added activities around any actual issues of data conflict. Getting to a good data set is not the goal; it is the beginning of a robust tax and compliance framework.