RegTech Intelligence

Get your MiFID II KYC checklist for 2016

JWG analysis.

JWG’s recent analysis report, the MiFID II KYC mountain, finds that financial institutions have a 12-item checklist to work through for their MiFID II KYC implementation due to the requirement for firms operating in the EU to acquire, document and agree much more information about their customer’s situation and their transacted business by January 2017.

MiFID II will be the final push to a new ‘summit’ of requirements for customer suitability, due diligence, marketing and identification.  It will mean that everyone using a financial product – be it a retail account, a simple currency swap or complex derivative – will need to disclose more information to their financial institutions and the data providers that serve them.  As a result, regulators will have far greater access to information concerning client activity.

Therefore, whether you are in a bank, regulatory agency or supplier to financial institutions, the KYC challenge is now part of the day job.  Record fines for AML failures compound the pressure to ‘get KYC right’ as regulators prescribe new rules for anyone that wants to stay in the business:

  • 500+ data requirements with new sources and definitions for customer data – that are not aligned
  • 40+ new regulations with multiple, iterative implementation dates mean continually ‘digging up the road’
  • £126 million in recent fines for client asset failings mean MiFID II’s new requirements will be a major focus for supervisors.

Taking a holistic and integrated approach across regulatory initiatives gives a unified viewpoint of ‘what I need to know about my customer’ for any given scenario.  The task is significant but, handled structurally and strategically, economies of scale are very achievable.

Those who make it to the summit in great shape will not merely have followed a regulation-by-regulation implementation approach, but will have cut costs and saved time by getting operational efficiencies from better data management, educated vendors, reduced overheads from legal fees and fewer fines from regulators.

Although it may seem like a long way off, there are many moving pieces, and 350 business days is a very short time to get ready.  To get to the top of the KYC mountain, you need to get moving on your strategy, targets and standards.

As we discussed in the last CDMG meeting, ‘Knowing the compliant customer in 2016’, describing this problem to senior management with the right message is a key challenge.

Accordingly, ‘The MiFID II ‘Know Your Customer’ mountain’ will serve as context for today’s CDMG meeting, ‘MiFID II KYC ramp-up’.

During the meeting, 20+ attendees will review the paper’s key messages, develop a business case for sharing regulatory KYC standards and collaborate on a common message for senior management.  Members can find their copy of the report, and the conclusions of the meeting, in the CDMG members’ area.

As ever, if you have any comments or queries we would be delighted to receive them.  Please email or call us on +44 20 7870 8004.

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