Last week, Switzerland-based Six launched a new Sanctioned Securities Monitoring Service (SSMS) on the Open:FactSet Marketplace (OFM) – a move that it hopes will change the game when it comes to filling in the gaps of KYC compliance for investment professionals.
The service is designed to help users mitigate risk by understanding the potential impact of sanctions on investment decisions. But instead of retroactively flagging individuals, it goes one step further by chasing down all the financial instruments and securities connected with those individuals, allowing banks to achieve comprehensive compliance across the board.
“I think the big gap in traditional KYC/AML services is that most of these only focus on named entities and the named individuals controlling these entities,” explains Oliver Bodmer, Senior Product Proposition Manager at Six. “SSMS focuses on issued securities of “watched” individuals or organizations who have been sanctioned by regulators or government bodies. It also takes into account under which sanction program / legal basis each identified security falls, drawing from various international regulatory bodies.”
With stringent new rules around beneficial ownership now in place in the US as well as Europe, it is more important than ever for firms to ensure they have a robust KYC compliance process – and according to Bodmer, the only way of effectively achieving that is through a big data service that can connect all the global dots.
The new sanctions service leverages the Six financial data banks, which hold information on over 30 million financial instruments, as well as monitoring 7.5 million active instruments and over 26,000 changes a week, including regulator updates and shareholder changes, plus the issuance of new financial instruments making it one of the most comprehensive sanctions and watchlist checks in the market. The firm has also teamed up with business information specialist Bureau van Dijk, a Moody’s Analytics company, which tracks over 360 million companies and around 273 million individuals.
“Whenever one of these individuals gets sanctioned, we can make that link from the individual to the company to the financial instruments that are connected to them,” notes Bodmer. “There are so many providers out there that are reacting ex-post – they start to look for information after an individual shows up on the sanctions list. What we can now do, working together with Bureau van Dijk, a Moody’s Analytics company, is complete that analysis ex-ante – we already have all the beneficial ownership data, so when someone gets sanctioned we can access that immediately and identify the implicated financial instruments straight away.”
The service is hosted on the Open:FactSet Marketplace, a cloud-access data exchange – highlighting the growing evolution in the way the financial industry consumes data, as it moves further towards a model where investment professionals can pick and choose which data they want from a range of providers.
“Investment professionals are working in an increasingly complex regulatory landscape, which makes understanding the impact of sanctions on portfolios and other research and compliance functions a growing priority,” comments Richard Newman, Senior Vice President and Global Head of Content and Technology Solutions at FactSet. “Clients face a challenge in finding and integrating datasets from a multitude of sources. Adding regulatory data from SIX to the Open:FactSet Marketplace will make it easier for them to integrate key information into their investment workflows.”