Client Money Checklist - 10 Steps to Compliance


Published on

According to FSA regulations governing client money (CMAR; CASS), medium and large firms must report their client money and asset returns monthly through the FSA's online system, GABRIEL.

By following these 10 easy yet invaluable steps as described in this industry expert paper, your firm will be in a much better position to comply with these regulations.

Published in: Business, Economy & Finance
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Client Money Checklist - 10 Steps to Compliance

  1. 1. Whitepaper: Client Money Checklist: 10 Steps to Compliance
  2. 2. 2 Client Money Checklist: 10 Steps to Compliance +44 (0) 845 603 3613 According to regulations governing CMAR, Client Assets Sourcebook (CASS), medium and large firms must report their client money and asset returns monthly through the FSA’s online system, known as GABRIEL. By following these 10 few easy steps, your firm will be in a much better position to comply with these regulations, which initially came into effect from October 2011: 1. Make sure that you understand what CMAR is all about: The changes required by CMAR are the result of enhancements that the FSA made to its Client Assets Sourcebook (CASS) in October 2010. These included new rules that now make it a legal requirement for firms holding client money or assets (in relation to an investment business) to submit a Client Money and Asset Return (CMAR) electronically, via GABRIEL, from October 2011. 2. Determine whether your firm qualifies as a large, medium or small organisation: According to the definitions contained within the Clients Assets Sourcebook (CSA), a firm’s CASS categorisation is based on the highest value of the custody assets and client money balances that it has held during the preceding calendar year or, in some cases, the highest projected balances the firm will hold in the current calendar year. Firms are obligated to re-determine their categorisation in January each year. 3. Mark your calendar: The new reporting requirement will apply to all CASS large and medium firms from 1 October 2011. CASS large and medium firms will need to submit their first CMAR within 15 business days from 30 October 2011, i.e. no later than 21 November 2011. At this point, the primary responsibility of completing and submitting the CMAR will rest with an individual employee within the firm that is in charge of CASS (known as the ‘CF10a’ in FSA-speak).
  3. 3. 3 Client Money Checklist: 10 Steps to Compliance +44 (0) 845 603 3613 4. Make sure that you have all the information that you need for CMAR right now: Easy access to any and all records relating to client bank accounts and custodian arrangements (including details of where and how custody assets are held) will be crucial in completing CMAR. Although firms may have existing information to complete some of CMAR’s more basic data fields, they may struggle to collect information that isn’t currently being produced, such as the market value of custody assets at the end of the reporting period, segmented by custodian. Firms should therefore start identifying and collecting this data now. 5. Firms need to verify that any institutions holding Client Money are acceptable to the FSA: CASS 7.4.1R identifies the type of institutions that are suitable for placing Client Money. In addition, CASS 7.5.2R goes on to list a limited number of circumstances in which a firm may allow another person, such as an exchange, a clearing house or an intermediate broker, to hold or control client money. 6. Convert any foreign currencies into British Pounds Sterling: The reporting currency for CMAR is GBP (sterling). For the purpose of calculating the value of the total amounts of client money and safe custody assets that the firm holds on any given day during a reporting period, firms will need to have processes in place to translate any client money and/or safe custody assets that are denominated in a currency other than sterling into sterling at the previous day’s closing spot exchange rate. 7. Communicate with third-party suppliers: Firms with existing outsourcing arrangements in respect of client money and custody assets activities must ensure that their respective third party/outsourced service providers will also be able to meet the CMAR reporting requirements.
  4. 4. 4 Client Money Checklist: 10 Steps to Compliance +44 (0) 845 603 3613 8. Don’t worry about daily valuation: It is not FSA policy to prescribe any particular methodology or frequency of valuation for safe custody assets. As a result, where valuations take place once a month, or less frequently than once a month, it is possible for firms to report the same figure for the highest and lowest safe custody asset balances held in any particular month on the CMAR return. A firm should determine the lowest and highest figures by reference to the data that it has recorded from internal reconciliations over the reporting period in question. 9. Leave no stone unturned: When calculating balances for the purpose of CMAR, firms need to ensure that they include any client money or safe custody assets that have been placed with a sub-custodian. A custodian in this case can be another firm with which the firm has deposited money or other assets, or even the firm itself, if it is acting as a custodian for others. 10. Don’t delay: Firms should identify any gaps in existing reporting and accounting systems through pre-implementation testing (including a mock-up completion of the CMAR), in order to work out any problems and to ensure that all of the necessary information is readily available. Find Out More For more information or to arrange a demonstration of AutoRek contact: Graeme McKee AutoRek Email: Tel: +44 (0) 845 603 3613
  5. 5. About AutoRek AutoRek is a leading global provider of expert financial data management software. Our solutions are purpose built to improve the quality and efficiency of data management, and incorporate high performance reconciliation software, cash applications and compliance products. Using AutoRek, up to 99.9% of transactions can be reconciled automatically, at a rate of tens of thousands of records per second. Our client base comprises many of the world’s largest corporations. For them, AutoRek helps increase their control and visibility over the entire financial process, enable reduced costs and improve adherence to financial legislation. 193-197 Bath Street Glasgow G2 4HU +44 (0) 845 603 3613