CounterpartyLink is helping users of its legal entity data meet regulatory compliance and risk requirements with the addition of deeper beneficial ownership information and the inclusion of CFTC Interim Compliant Identifiers (CICIs) in its data feed.
Additional data fields to support the extended information have been included in the legal entity database that CounterpartyLink distributes to its customers on a daily basis and also makes available online for ad hoc access via its recently introduced CPL Online tool. The expanded legal entity ownership information improves on provision of data covering owners of 25% of an entity, as required by the third European Union Anti-Money Laundering Directive, to cover owners of 10% of an entity, a requirement that is introduced in the Foreign Account Tax Compliance Act (Fatca) that comes into effect on 1 January 2013.
In preparation for the March 2013 introduction of a global legal entity identifier (LEI) system aimed at curbing systemic risk, CounterpartyLink has added CFTC CICI identifiers, which are expected to be the precursors of LEIs, to the legal entity database and will continue to do so as they are issued. The company is providing more reference data around legal entities than has so far been proposed for the LEI system and the database can be searched in real time using CICIs, and later LEIs.
CounterpartyLink managing director James Redfern, explains: “Both buy-side and sell-side institutions use the legal entity data feed. At the moment, the focus is on know-your-customer checks, which everyone must do, and on client on boarding, but there is more regulation to come that requires accurate legal entity information, such as the Dodd-Frank and Fatca acts.” Redfern also points to the need for accurate entity identification and information to improve risk management and, at a basic level, to support good business practice.
The expanded legal entity data feed incurs no additional cost above existing annual subscriptions and provides users with information on 150,000 live entities that are subscribed to by users and a total of 350,000 entities when the entities’ parent hierarchies are included.
Redfern says companies such as Dun & Bradstreet and Avox are often perceived as competitors to CounterpartyLink, but suggests the reality is that the company’s services are not used to knock out competitors, but to replace in-house efforts to build legal entity databases. “We reduce the burden of collecting and maintaining legal entity data. Our aim is to commoditise it. Our sweetspot is low and medium-risk entities, leaving our clients to focus on data around high-risk entities,” he says.
Playing to its strengths as a legal entity data provider that sources directly from primary sources, such as registration authorities, regulators and exchanges, CounterpartyLink’s next development is a rating type of indicator that will inform users of the company’s legal entity data about the level of completeness of a record in terms of data from primary sources.