22/03/2023
The services that third-party vendors offer to trading brokers
are continuously feeding into and supporting each other. From onboarding and screening to
the monitoring of activity after the user is fully integrated, accumulated data informs
future strategy and process decisions.
Third-party vendors help streamline and automate retail broker
onboarding processes, such as KYC checks. This lowers overall costs, improves efficiency,
and ensures consistent regulatory compliance. The use of a dedicated CRM system allows
brokers to apply different methodologies per jurisdiction/regulation and make changes
swiftly. Accurate and consistent assessments are ensured through automation, reducing
potential for human error. Good communication and customer support are important
components of regulatory compliance and can be facilitated through a strong, adaptable CRM
function. The onboarding data being gathered at this stage is optimised and condensed to
be as useful as possible as the user moves down the funnel into the screening process.
The next step in the process is Anti-Money Laundering screening
(AML) and it is a process that is used to identify and prevent illegal or suspicious
financial transactions. This helps to safeguard the broker from any illicit and
sanctionable activities occurring on the platform. It works by checking the identity of
customers against a database of individuals and entities that are known to be involved in
illegal activities, such as money laundering or terrorism financing. If a match is found,
the user is flagged for further investigation and potentially blocked to prevent illegal
funds from entering the system. Information gained from the screening process can also be
used to inform the ongoing monitoring process that trading platforms are obligated to
conduct once the user has an active account.
Finally, third-party vendors assist with the ongoing account
monitoring process in post-trade monitoring, risk management, and transaction reporting.
They help brokers automate post-trade monitoring to check for discrepancies, provide
real-time analysis of equity and client balances for risk management. Also offering
ready-made reporting templates for transaction reporting obligations to ensure compliance
and accuracy. Vendors use this accumulating dataset to provide guides for best practices
to remain compliant across multiple jurisdictions as well as inform decisions pertaining
to strategy in the onboarding and screening stages.
Find out more about how technology partners can help in
supporting retail brokers with a variety of regulatory and compliance obligations with
our downloadable Finalto Broker Series
report.