CounterpartyLink, a provider of global legal entity and counterparty data, has reversed the concept of client on-boarding with the offer of a client off-boarding service designed to help large financial institutions clean up their client databases, improve operational efficiency and reduce operating costs.
The company has been working with a handful of clients to off-board client data for some time, but has formalised its offering in response to conversations with clients and prospects in the risk management and regulatory compliance communities that acknowledge the maintenance and cost problems of increasing data volumes and recognise the benefits of off-boarding.
CounterpartyLink notes two aspects of off-boarding client data: achieving accuracy of data in client databases; and providing an opportunity to review client databases and decide which data to keep and which to move off the database. The company’s off-boarding service is supported by its ability to monitor legal entity data in near real time and uses its proprietary automated matching process as a first step in verifying the existence of all the entities on a client’s customer list and identifying duplicate or incorrect data. The automated process can filter data depending on client requirements and is followed by data analysts who investigate any mismatches and other anomalies in the data.
The cost of the service is based on correct records, with CounterpartyLink charging for correct records, but not duplicated or inaccurate records that it flags up for potential removal from the client’s database.
James Redfern, managing director of CounterpartyLink, says clients typically ask the company to review low and medium risk entity data, although a few include high risk entity data that is difficult to validate. With 100% of the company’s clients holding duplicate data, he expects the client off-boarding service to attract both existing and new customers, and suggests the sweet spot will be among large organisations where data management is handled by the middle office, which unlike the front office, does not come into direct contact with clients.
Discussing the reversal of the client on-boarding process required by regulations covering issues such as know-your-customer and anti-money laundering, Redfern explains client off-boarding, saying: “The focus on a legal entity-centric workflow is a dominant force in compliance. This requires an understanding of hierarchical ownership and beneficial ownership details to high degrees of accuracy. Client off-boarding is an important element for maintaining legal entity information and has a significant impact on reducing reputational risk, freeing up staff resources and cutting costs.”