Friday, 03. March 2023
sphere.swiss by Achille Deodato, CEO, Indigita
Compliance with cross-border regulations is the duty of any financial intermediary interacting with clients and prospects domiciled abroad. The responsibility to comply with the applicable rules is shared across all levels of a wealth management organisation, from the board of directors (BoD) to the individual client advisor.
The BoD sets the course by defining the cross-border strategy and overall risk appetite of the organisation. This includes the definition of core and secondary markets, and whether client acquisition in those markets follows an active or passive approach. The cross-border strategy also specifies jurisdictions in which no business relationships may be entered into. Once these parameters have been set, the BoD needs to provide management with the resources needed to implement the chosen cross-border strategy. This includes budget, training of staff, implementation of controls and monitoring of cross-border activities. Finally, the BoD has the duty to ensure that regular reporting on cross-border activities is submitted by the management.
Management is responsible for putting the organisation’s cross-border strategy into practice by establishing an effective control framework and putting the necessary controls in place, designing an appropriate training curriculum, and reporting on cross-border activities and risks. Day-to-day monitoring of cross-border risks is usually handled by the compliance and risk functions, while it remains the duty of every single employee, particularly relationship managers, to respect all internal rules and applicable regulations when dealing with clients and prospects from abroad.
Since the responsibility to comply with cross-border regulations rests at all levels of a financial intermediary, the violation of cross-border rules can have consequences not only for the individuals directly involved in an interaction, but also governing bodies such as the BoD and management boards. Such consequences can range from a financial organisation being deemed “not fit and proper” by FINMA to civil and criminal proceedings, and personal criminal charges and fines.
Indigita has developed a range of innovative digital solutions, which allow the effective and efficient implementation of cross-border strategies by seamlessly integrating automated cross-border checks and controls with existing processes.