For several years now, in the wake of the global financial crisis, policymakers have focused on bringing greater transparency to global financial markets. The aim is to lower risk and protect market stability. While requirements such as Know Your Customer (KYC), Anti-Money Laundering (AML) and the Foreign Account Tax Compliance Act (FATCA) are designed to help achieve these goals, they will also create greater operational complexity and higher compliance costs for firms in managing their client documentation and reference data. This problem is exacerbated by a lack of standardization, which forces companies to interpret these regulations independently, resulting in slightly different policies and duplicative, inconsistent and time-consuming processes across the industry.
For Clarient Global LLC™, an industry utility founded in 2014 by The Depository Trust & Clearing Corporation (DTCC) and six major global banks, the key to solving this challenge lies in bending the cost and risk curves. Clarient is tackling this challenge by developing an industry-wide, single platform solution, known as Clarient Entity Hub™, to standardize critical processes while providing the transparency and control to successfully manage the client data and documentation process.
“Firms recognize that client onboarding and client reference data are no longer strategic differentiators. It is an area of increasing cost and risk to them and frustration for their clients,” said Matthew Stauffer, CEO of Clarient. “The industry needs an integrated, global utility to streamline interaction between market participants and their clients, and deliver the highest level of control, standardization and data privacy for client onboarding, including KYC, and the ongoing client lifecycle.”
Clarient Entity Hub employs innovative, new technology and existing DTCC client reference data assets that give investment managers, hedge funds and corporates a tool to centrally upload, validate, permission, distribute and securely store entity-level information, documentation and hierarchy data. Among other things, the service provides complete transparency and control of information access. In addition, a dedicated operations team of client onboarding and legal entity reference data specialists will validate data and documents, enrich the Clarient Entity Hub “golden record” and manage exceptions.
“Our goal is to standardize, centralize and automate the collection and validation of client data and documentation,” Stauffer said. “This will, in turn, increase efficiency, mitigate operational risk and reduce costs while promoting compliance with existing and emerging mandates. We believe Clarient can bend the cost and risk curves and resolve a key industry challenge.”