Managing the impact of Regulatory Change on bank
Managing the impact of Regulatory Change on bank processes and technology Joe Dunphy VP Product Management - Fenergo © 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement © Fenergo 2016, All rights reserved. © 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement.
About Fenergo Overview Client Lifecycle Technology company focused on legal entity data management, regulation and client & account related workflows for Investment, capital market and private banks. Enabling financial institutions to ensure global compliance with regulations such as KYC, AML, Tax (FATCA & CRS), Derivative Reform (Dodd-Frank, EMIR, Canadian & APAC deriv. rules), through a community based approach to solving regulation. 32 FIs live on our software, with 18 current active FI implementations. We have 1 agenda: To serve the Client Lifecycle Mgmt. space and become “The Standard”. The Fenergo business has grown on avg. 100% yearly for the past four years, culminating in Insight Ventures and Aquiline Partners investing € 75 m to fund growth in the summer of 2015. Headquartered in Dublin, with offices in the New York, Boston, London, Singapore, Abu Dhabi Sydney and Wroclaw. Fenergo are a specialist team of 300 Entity Data, KYC, Tax, Derivative and COB technology specialists. 2 © 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement.
Regulatory Storm Volume of New Requirements OTC Derivatives, BCBS, EMIR, FATCA, CRS, 4 th EU AMLD, Patriot Act, Margin, Mi. FID II, GDPR. . . Managing Regional Variations Scope Overlap: e. g. Dodd-Frank, Canadian Derivatives, EMIR, OTC Asia Pac Implementation Timeframes Tight timeframes, changing scope, large areas of business impact Cost and Service Impacts Increased customer requirements, longer onboarding timeframes, inefficient legacy processes ü FATCA Global Tax; 3 rd AMLD 4 th AMLD; MIFID Mi. FID II ü Competing Challenge: COO, Head of Compliance, CEO, Front Office © 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement. 3
Ongoing Regulatory Change Ever growing regulatory environment © 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement. 4
How are banks addressing the challenge? Consolidated delta-based solutions Integrated Lifecycle Model Rules-based configuration © 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement. Centralisation of Functions Community approach 5
Re-use: Manage the Delta AML / KYC Dodd Frank FATCA CRS EMIR…. Legal Entity Name, Address, Type, Entity Role & LEI Legal Entity Name, Entity Address, Entity Type, Entity Associations & Party Relationships Traded Products, Accounts & Booking Entities Documents: Cert of Incorporation, Beneficial Ownership, Trading Agreements PEP Data EBC Protocol 1. 0 GIIN Tax Residency EMIR Classification Sanctions Screening Swap Docs 2. 0 FATCA Classification Self Certification Clearing Exemption Risk Scoring DF Protocol& Compliance FATCA Docs W 8W 9 Reportable Jurisdictions EMIR Reporting Req Single & Consolidated Party Data Regulatory Store © 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement. 6
Integrated Client Lifecycle Management Bank trading platforms CRM Entity Data Client Lifecycle Events New client KYC Utilities AML Data Bank’s Firewall Consume Understand Route Dodd Frank EMIR New Product Account Fund Existing Client Reviews Client Maintenanc e Client Offboardin g Regulatory rules and classification framework FATCA AML CRS HKMA MAS ASIC KYC Risk assessment PEP / Sanctions Market access KYC Entity Data Management Industry Data ISDA AMEND Client Data / SCD SSI’s KYC / AML Data Classification Hierarchies Data Account Setup Reporting Platform Operational Data Management Authorised Actions Contract Managemen t Managed Accounts 8 Trading Agreement s SSIs 7 © 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement. 7
Rules Engine Execution Client Lifecycle Driven by Bank App UI or Fenergo UI Request OB and Initiation KYC Ops Credit Legal Workflow & Rules Engine (Tightly Coupled) Decision Criteria KYC Credit Operations Legal • • • Credit Required: YN • Routing ruleslimits • Checklists • Documents • Approvals • ISDA Required • Compliance checks LE Type LE Role Traded Product Booking Point Jurisdiction Risk Rating Factors SDD Vs EDD KYC question set Classification MLRO Business Rules Engine Decision Table Workflow Table Documents © 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement. Classification Types Classification Details 8
Centralisation The Big Picture Challenges Technology Toolset Centralisation § Shared/managed service approach Data Residency Requirements Confidentiality Countries Offering a Comparable Level of Protection Data Masking § KYC and AML directives § Reporting obligations – CRS / OTC § BCBS 239 Protection of Associated Entities Data Access Restrictions Jurisdictional rules Localisation Personally Identifiable Information Splashscreen validation § Local data protection and privacy laws § Lack of uniformity § Non-contracted 3 rd parties Confidential Clients / Confidential Deals © 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement. Inheritance 9
Community Approach Regulatory Lifecycle – a community approach Monitor Initial Proposal Detailed Design Product Delivery Implementation Monitor upcoming regulatory change and tracks via the regulatory roadmap. Regulatory analysis team create initial proposal for review and debate at Forum. The roadmap is shared with the Forum and timelines, approach and content is debated and validated The proposal is refined in line with the Forum direction Regulatory team work with analysts and nominated Bank SMEs to produce detailed product design specifications. Deliver the new functionality as an update to the product / systems in advance of the regulatory deadlines. The new functionality is rolled out for implementation to allow adherence to the new regulatory requirements. This design is reviewed and approved at the Forum (Bank SMEs remain involved for review and direction throughout the delivery process) © 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement. 10
Final Thoughts There is no neutral option – every decision makes it better or worse Look beyond the immediate tactical requirements of each regulation to create an extendable strategic approach FINRA OTC KYC Patriot Act / 4 th AMLD AML Regulatory Framework TAX BCBS 239 Risk Ass. FATCA Mi. FID e l ab nd te Ex Client Classifications k or ew am Fr CRS / CDOT APAC OTC Deriv. Reform © 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement. Flexible regulatory Framework supporting all regulatory rules & classifications 11
Thank You Visit Us on Stand #12 e: info@fenergo. com w: www. fenergo. com or follow us on: Global Headquarters: Ormond House, Ormond Quay, Dublin 7, Ireland United Kingdom: 200 Aldersgate, London, EC 1 A 4 HD North America: 5 th Floor, 1177 Avenue of the Americas New York, NY 10036 North America: 470 Atlantic Avenue, Suite 4051 Boston, MA 02210 APAC: Level 57, MCL Centre, 19 -29 Martin Place, Sydney, Australia, NSW 2000 Thank You © 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement © Fenergo 2016, All rights reserved. © 2016 Fenergo Limited. Confidential - Receipt and Use Only Via Confidentiality and Non-Disclosure Agreement.
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