1. Rethinking Client Onboarding
February 2014

2. Rethinking Client Onboarding
Key Regulatory impacts on Client Onboarding
Regulation
Dodd Frank Act –
Title VII
Dodd Frank Act –
Volcker Rule
Jurisdiction
Impacts on Client Onboarding
U.S.
– OTC clearing will call for an update of legal documentation (ISDA, give-up
agreements…)
– Reporting to trade repositories with time constraints will imply a more efficient
onboarding
U.S.
People Process Data Systems
– More robust identification and more extensive classification schemes will need to
be applied
– More detailed relationships (e.g. agent, principal) may need to be stored for more
granular credit risk calculation and disclosure
– Initiative currently incorporated into Dodd Frank and expected to be adopted by
European regulators
– New identifier field to be captured and existing client data will need to be cleansed
to incorporate the LEI
– Liaison to be built with Third Party Swap Data Repository
– Similar requirements as DFA with regards to clearing documentation and reporting
rules (see Appendix for the table of fields to be reported)
Legal Entity
Identifier
Global
EMIR
Europe
Resolution
Planning
Global
– SIFIs must provide detailed recovery and resolution plans for unwinding in case of
default, including relationships with key counterparts and clients
FATCA
Global
– AML: Stricter CDD and Client Acceptance procedures
– KYC: Additional Client Profile requirements
– Tax Identification Number (TIN or GIIN) needs to be collected for US persons
Basel III
Global
– Will require centralized data to support risk management calculation and a reevaluation of the types of customers and Due Diligence ahead of client onboarding
MIFID II and
Market Abuse
Europe
– Increased focus on client categorization and eligibility
– New KYC checks and approvals
4th AML Directive
Europe
– Beneficial owner identification and disclosure
– Enhanced Due Diligence in certain situations of high risk
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3. Rethinking Client Onboarding
Challenges faced by Corporate and Investment Banks
1
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Data
Lack of defined Golden source with
incorrect mapping between sources and
downstream systems
Operated across siloed data sources
Lack of unique client identifiers
Non-homogeneous client account
hierarchy used especially with funds
2
Systems

Multiple regional and/or product systems
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Current IT architecture does not support
necessary changes to client
portals, workflows and compliance/ops
systems
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Lack of synchronization among multiple
systems
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Process
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Overall ownership of end-to-end process rarely
exists; roles and responsibilities are often
unclear
Lack of information sharing between front and
back office generating no revenue-sharing
model
Difficulties reporting status of approval,
documentation and client requests

Client onboarding viewed as routine process
High operational risk linked to manual
processes

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Fragmented process that prevents seamless
onboarding function and no centralized
view of a client

Increasing workload putting resources under
pressure

Need to transform the onboarding
function to allow timely response to
regulatory changes
Major roadblock leading to operational
breaks

People
Standard Operating Procedures (SOP) are
often poorly defined and shared globally
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4. Rethinking Client Onboarding
Key success factors and benefits (1/2)
Key Success Factors
 Give ownership to a dedicated Onboarding team across the various business
lines and divisions
1
Single Point of
Contact
 Identify dedicated contacts across the business for internal requests
 Establish a governance body to provide leadership and oversight
Benefits
 Improve client satisfaction by avoiding
multiple requests
 Move from a traditional siloed approach
to a functionally unified client-centric
governance model
 Draft SLAs to make all the stakeholders in the onboarding process
accountable
 Deploy the organization globally across the different territories
 Rationalize organizational structures to avoid delays in understanding needs
Global
Organization
3
Process
Standardization
 Set up global standards to serve clients
and provide consistent information
whatever the location
 Base the global onboarding policy around the most stringent regulations and
accommodate the different jurisdictions
 Create synergies and leverage best
practices of each territory
 Adopt a horizontal approach to managing compliance with existing and new
regulations
2
 Ease the access to information
 Smooth out the communication
 Define a master list of client document requirements before contacting
clients
 Ensure that the COB team controls the master document and prevent from
other groups to ask additional documentation
 Set up similar processes for all the business lines
 Set up a global document management solution
 Study the opportunity to offshore some functions related to client
onboarding (static data input and maintenance for instance)
 Create synergies between business lines
 Create flexibility to quickly adapt the
organization to regulatory changes
 Avoid back and forth with the client to ask
additional documents
 Homogenize the processes across
business lines
 Create synergies between business lines
and territories
 Improve the efficiency of the process,
reduce overall onboarding time and
associated costs and lower operational
risk
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5. Rethinking Client Onboarding
Key success factors and benefits (2/2)
Key Success Factors
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Data
Centralization
and Quality
 Define a golden source of client data with a client data repository acting as a
client onboarding master database with:
 A client identifier as a primary key
 A cross reference with alternative identifiers within the COB framework
 A standard client hierarchy
 Ability to support different statuses of client activity lifecycle
 Define your own set of key client data attributes then focus on the client’s
risk profile, trading preferences etc. at a granular level
 Set up a single cross reference to link clients, accounts and documents
 Automate wherever possible – onboarding of low-profile risk, referential
controls…
Focus on the LEI
 Make sure that there are no multiple entry points for keying the LEI and
cross-reference between multiple identification schemes and taxonomies
 The LEI field within the KYC database should feed into legal, credit, collateral
and operations systems for the purposes of consistency and transparency
 LEIs should connect to each other and properly reflect their hierarchies
throughout the system
 Enhance entity databases to include hierarchies, management profiles and
linkages to underlying asset classes, link entity level corporate actions data
Benefits
 Get a holistic view of client’s activities
 Promote a single view of the client
 Avoid repeatedly asking clients for the
same information
 Attributes and hierarchies consistency
 Correct mapping between sources and
downstream systems
 Ability to support the lifecycle of an entity
on an ongoing basis
 Establish a governance body to provide leadership and oversight
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Monitoring
 Get a clear view of responsibilities
 Define KPIs to measure the performance of client onboarding operations
end-to-end and monitor the business (segmentation, cross-selling…)
 React more quickly to potential changes
in due diligence requirements
 Leverage client profiles for credit risk management and capital requirements
 Enhance risk management, cross-selling
analysis, client segmentation and
profitability reporting
 Build a monitoring process which takes into account potential changes of
client and counterparty classification throughout their lifecycle
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