In the current demanding environment, Financial Institutions are facing a complex challenge: attract new clients while keeping a strict cost effective approach and coping with local and global regulations. CH&Cie takes you through the stakes and key success factors to to increase attractiveness and customer satisfaction.

1. Rethinking Client Onboarding
January 2014
Stephanie Baruk sbaruk@chappuishalder.com

2. Regulation Jurisdiction Impacts on Client Onboarding People Process Data Systems
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Rethinking Client Onboarding
Key Regulatory impacts on Client Onboarding
– 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
Dodd Frank Act –
Title VII U.S.
– 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
Dodd Frank Act –
Volcker Rule U.S.
Legal Entity
Identifier Global
– 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
EMIR Europe – Similar requirements as DFA with regards to clearing documentation and reporting
rules (see Appendix for the table of fields to be reported)
Resolution
Planning Global – SIFIs must provide detailed recovery and resolution plans for unwinding in case of
FATCA Global
default, including relationships with key counterparts and clients
– 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 re‐evaluation
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
– Beneficial owner identification and disclosure
4 – Enhanced Due Diligence in certain situations of high risk th AML Directive Europe

3. 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
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Systems
 Multiple regional and/or product systems
 Current IT architecture does not support
necessary changes to client portals,
workflows and compliance/ops systems
 Major roadblock leading to operational
breaks
 Lack of synchronization among multiple
systems
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3
Need to transform the onboarding
function to allow timely response to
regulatory changes
Process
 Fragmented process that prevents seamless
onboarding function and no centralized
view of a client
 High operational risk linked to manual
processes
 Difficulties reporting status of approval,
documentation and client requests
 Standard Operating Procedures (SOP) are
often poorly defined and shared globally
People
 Increasing workload putting resources under
pressure
 Client onboarding viewed as routine process
 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
Rethinking Client Onboarding
Challenges faced by Corporate and Investment Banks
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4. 4
Rethinking Client Onboarding
Key success factors and benefits (1/2)
Key Success Factors Benefits
Single Point of
Contact
 Give ownership to a dedicated Onboarding team across the various business
lines and divisions
 Identify dedicated contacts across the business for internal requests
 Establish a governance body to provide leadership and oversight
 Draft SLAs to make all the stakeholders in the onboarding process
accountable
 Improve client satisfaction by avoiding
multiple requests
 Move from a traditional siloed approach
to a functionally unified client‐centric
governance model
 Ease the access to information
 Create synergies between business lines
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Global
Organization
 Deploy the organization globally across the different territories
 Rationalize organizational structures to avoid delays in understanding needs
 Base the global onboarding policy around the most stringent regulations and
accommodate the different jurisdictions
 Adopt a horizontal approach to managing compliance with existing and new
regulations
 Set up global standards to serve clients
and provide consistent information
whatever the location
 Create synergies and leverage best
practices of each territory
 Smooth out the communication
 Create flexibility to quickly adapt the
organization to regulatory changes
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Process
Standardization
 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)
 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. 5
Key Success Factors Benefits
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
 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
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Rethinking Client Onboarding
Key success factors and benefits (2/2)
Monitoring
 Establish a governance body to provide leadership and oversight
 Define KPIs to measure the performance of client onboarding operations
end‐to‐end and monitor the business (segmentation, cross‐selling…)
 Leverage client profiles for credit risk management and capital requirements
 Build a monitoring process which takes into account potential changes of
client and counterparty classification throughout their lifecycle
 Get a clear view of responsibilities
 React more quickly to potential changes
in due diligence requirements
 Enhance risk management, cross‐selling
analysis, client segmentation and
profitability reporting
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