FMSB Unveils New Guidelines to Simplify Client Onboarding and Enhance Efficiency
The Financial Markets Standards Board (FMSB) is crucial in enhancing the fairness and efficiency of wholesale financial markets. With its commitment to transparency and high standards, the FMSB aims to eliminate confusion in trading practices, ensuring that market participants adhere to consistent practices.
The Role of the FMSB in Financial Markets
According to Moody’s, the FMSB takes a proactive stance by:
- Monitoring emerging risks and trends in the financial markets.
- Engaging with a diverse range of industry participants and public authorities.
- Contributing to the establishment of international market standards.
New Client Onboarding Guidelines
Recently, the FMSB released detailed guidelines for client onboarding, aimed at simplifying the documentation processes for financial institutions (FIs). This initiative is designed to help FIs comply with regulatory standards by providing a clear framework for gathering and verifying essential customer information.
Key Recommendations from the FMSB
The FMSB emphasizes several core areas in its onboarding guidelines:
- Identity Verification: Collect documents to verify clients’ legal names, former names, legal forms, registered addresses, and countries of incorporation.
- Business Verification: Gather information regarding the client’s industry type, primary business activities, main location, and regulatory status.
- Structure Verification: Confirm details about significant influencers within the client’s business, such as shareholders, Ultimate Beneficial Owners (UBOs), and key controllers.
- Connected Parties: Collect and verify information about connected parties, including authorized signatories and account opening agents.
- Supplementary Operational Data: Compile additional operational data like Legal Entity Identifiers (LEIs), settlement instructions, and contact information.
Structured Approach to Document Mapping
The FMSB advocates for a systematic approach to mapping documents to the necessary data points for onboarding. This approach involves:
- Assessing the credibility and relevance of each document type.
- Prioritizing documents based on their source and reliability.
Enhanced Due Diligence Communication
For situations requiring enhanced due diligence, the FMSB has developed a template for communication, ensuring that clients understand the need for additional documentation, especially in high-risk cases.
Benefits of Following FMSB Guidelines
The FMSB’s guidelines provide significant advantages for financial institutions, including:
- Ensuring rigorous verification of identity and business information through public and non-public sources.
- Identifying and verifying key individuals and entities associated with clients.
- Adhering to a structured process for sourcing evidence to maintain data integrity.
- Maintaining clear communication with clients about the onboarding process and potential due diligence needs.
- Upholding compliance with regulatory standards to ensure accountability and best practices.
According to Marisol Lopez Mellado, Senior Director and Industry Practice Lead at Moody’s, “Understanding the Financial Markets Standards Board (FMSB) guidelines for client onboarding can be truly helpful to businesses that want to help maintain the integrity and efficiency of financial markets. By following the standards, financial institutions can create more thorough onboarding processes, in line with best practices.”
For more insights on financial standards, visit the FMSB official website.
