Using client onboarding to protect global reference data

The world of client onboarding is bracing itself for a raft of new regulations that will have a significant impact on global reference data and associated data quality for risk management and compliance. Legal Entity Identifier (LEI) regulation aside, many of the new emerging regulations - such as FATCA, EMIR, MifID II, Dodd-Frank and the Volcker Rule - will necessitate the matching, cleansing and remediation of new client data against master global reference data repositories to ensure continued compliance with new regulations, with additional client classifications potentially being required too.

No doubt representing an onerous and time-consuming obligation for financial institutions, these regulations are also a perfect opportunity to take a fresh look at current data management practices, with a view to tightening up processes that will lead to a “single point of truth” for client data and enhanced visibility of the client throughout the financial institution.

A cleansed legal entity data repository begins with the legal entity initiation, set-up and management. To achieve true governance and control over legal entity data management, the onboarding function must be capable of matching legal entities against those already stored in the various bank systems. If a match is obtained, the onboarding solution should be capable of cleansing and remediating this data, identifying any new information, as well as updating the system and all integrating systems with this new information accordingly. This holistic, newly cleansed legal entity record will now be ready to undergo regulatory risk assessment. In cleansing, remediating and updating data in this way, the bank only has to capture data once and control its use throughout the institution, serving also to protect the bank’s Master Data Management (MDM) investment. The onboarding function, therefore, becomes the global reference data’s most essential gatekeeper.

To manage this process properly, it is necessary to try and automate as much of this as possible – particularly given the complexities associated with legal entity data management and the hierarchy of legal entities that must be managed and profiled simultaneously. The bank needs to be capable of drilling into the hierarchy of all new legal entities and identifying clearly how they are connected, measuring their impact on the financial picture and risk assessment of the onboarding entity, whilst complying fully with in-country data protection policies.   

The integration of data is a fundamentally important part of the end-to-end client onboarding lifecycle management, leading to the creation of a 360-degree view of the client. The ability to see the client at any point during the relationship lifecycle – all their data, checks, documentation, collateral, trading histories and client service interactions – in one place is critical to minimising the bank’s risk of exposure and eliminating the threats that departmental silos can present for client data and the bank’s risk exposure. Once successfully onboarded, a client is rigorously refreshed and reviewed on an ongoing basis, mitigating the risk involved in changing client data and continually keeping the master data complete and cleansed, further future-proofing a bank’s global reference data investment.