Client Suitability and Appropriateness Checks
AML and KYC regulations require firms to know who their client is, and to ensure checks have been done to confirm that you can trade with them i.e. to ensure that they are not on any sanctions lists.
As part of KYC regulations and the MiFID II requirement, financial institutions must evaluate a client’s suitability and/or appropriateness for each financial product and service requested. Thus Investment firms need a means of performing and recording these client suitability and appropriateness checks in as low touch a manner as possible. Watch Alan Gleeson, Chief Marketing Officer at NorthRow, explain how we can automate due diligence checks along with evaluating client suitability.
How Do NorthRow Help?
We have partnered with muinmos to leverage their capability in this space. They offer a software application called muinmos PASS which classifies a client in accordance with MiFID II and instantly determines whether an investment firm can onboard a client to trade with it in a particular service, product, or location.
These checks go ‘hand in hand’ with Know Your Customer (KYC) checks, and with muinmos we deliver an integrated solution which also helps our clients fulfil KYC/ AML obligations. With this partnership, clients can now complete customised questionnaires on white-labelled forms and a single API returns two red-amber-green responses: one for AML/KYC and the other for client suitability & appropriateness.
muinmos PASS also notifies clients of any regulatory changes thus ensuring you remain compliant 24/7. In short, the solution reduces the onboarding time to a matter of seconds and at a fraction of the cost of alternative approaches. The integration between NorthRow and muinmos means that clients can obtain both solutions via a single interface, making client onboarding a one-stop solution.
Watch Matt Law, NorthRow's Chief Technology Officer, explain how our solution works.
In summary, the suitability and appropriateness requirements under MiFID II ensure that investment firms which provide trading access, investment management and/ or investment advice act in their clients’ best interests so as to enhance investor protection. Suitability and appropriateness, as applicable, has to be assessed against a clients’ investment knowledge, their experience, their financial status and their investment objectives. In order to be compliant, investment firms have to obtain the necessary information from clients based on their classification, the service they want to receive and the complexity of the product they want to trade in. Solutions like NorthRow and muinmos Pass help firms achieve this in as low touch and cost-effective manner as possible.