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CounterpartyLink: Client off-boarding – ignore at your own peril

CounterpartyLink announces new service for managing client record maintenance

CounterpartyLink (CPL), a leading provider of global, evidence-based legal entity intelligence, has launched a new and unique addition to its ownership/entity service, for “off-boarding” redundant client data. Numerous discussions with clients and prospects in the risk management and regulatory compliance community in banks, asset managers and other global financial institutions, have highlighted “Client Off-Boarding” as an important and innovative route to efficiency and much-needed cleansing of customer accounts. Client Off-Boarding is the opposite of on-boarding in that it’s the proactive management and removal of redundant, obsolete or incorrect information on clients and assets.

As with legal entity identifiers (LEIs), building out and maintaining hierarchical relationships are key to compliance and risk management, and can account for significant work, which takes up valuable resources. If an entity is no longer required, the potentially extensive network of related group structures may also no longer be required. This wasteful and costly use of resource and database capacity has been highlighted as one of the fastest-growing compliance challenges facing the industry. CPL enables its customers to remove hundreds of unnecessary client and counterparty records from their processes, saving them tens of thousands of pounds per year.

James Redfern, managing director of CounterpartyLink, said: “The focus on a legal entity-centric workflow is now a dominant force in compliance globally. This requires understanding hierarchical ownership and beneficial ownership details to very high degrees of accuracy. We continuously monitor legal entity data, in near real-time. Client Off-Boarding is an important element for maintaining legal entity information and has a significant impact on reducing reputational risk, freeing-up staff resourcing and cutting costs.” He continues: “Client Off-Boarding also makes marketing more efficient as it is clear which customers can be approached, rather than spending time on outdated contacts.”

Customer on-boarding is a familiar, but onerous task faced by financial institutions having to verify clients, counterparties, issuers and other bodies as legitimate legal entities in order to meet KYC and AML requirements. Risk and compliance managers are acutely aware of the reputational risks and the penalties for non-compliance. The number of customer accounts that need to be maintained can grow exponentially through client on-boarding. However, the larger the database becomes, the more complex, time-consuming, expensive, but also vital is its maintenance. CounterpartyLink’s Client Off-Boarding helps to automate this process. Some of the key functions of Client Off-Boarding are:

  • Verifying the existence of all entities in the client’s customer list, and by exception the non-existence of others.
  • Verification of the entities being identified by the correct legal name, address, etc., thus identifying duplicates.
  • Establishing hierarchical and group relationships identifying, for example, separate accounts which are part of the same group.
  • Identifying all entities which have incorrect elements such as address, beneficial owners, etc.

An increasing number of firms are now, for the first time, seriously considering outsourcing some of the burden of collecting and maintaining legal entity data. Despite tightening budgets within compliance teams, financial institutions recognise the need to ensure that low, medium and high risk clients are verified to higher levels than ever before.