The new account opening process has a dizzying amount of moving parts. And you can’t afford to have everything grind to a halt and risk losing a client because of friction caused during the process.

The digital transformation has helped keep the momentum going by eliminating the old stack of papers that used to be a stalwart of new account opening. But even for the most digitally advanced firms, things are not as simple as opening an app on a computer, signing in with a username and password, and — abracadabra — everything is magically done. There are a lot of boxes that advisory firms need to check. One of the most often overlooked components of the new account opening process is oversight of all of the compliance requirements. Even if the rest of the new account process has been digitized, the compliance checks are often still done manually and as an afterthought—if they are remembered at all. But with the right RegTech, firms can conduct compliance checks during the account opening process.

We have the best ways to optimize your firm’s oversight process when opening new accounts so you can keep all of the gears moving at the same time.

How to Optimize Compliance Oversight
In today’s increasingly digital world, firms must be able to open and service new accounts quickly to meet the needs of their clients. But it also must be done in a way to meet the increasingly strict, numerous, and ever-changing compliance regulations. There are three main compliance checks conducted during new account opening that can be optimized:

  • Suitability Testing
  • License and Registration Validation
  • OFAC Testing
All of these must be conducted and detailed so that they are available for regulatory audits down the road. Let’s look at each one individually to see how they can be made more efficient.

Suitability Testing
When opening a new account, suitability testing will depend on your firm’s specific regulatory requirements, including Reg BI, and may need to be done and proven based on such criteria as:

  • Investment objective
  • Risk tolerance
  • Source of funds
  • Age
  • Time horizon
Optimizing this process is best done with workflows and tests that can be configured based on unique review processes and requirements. RegTech solutions like Skience offer automated workflows with one-click suitability testing to speed up inefficiencies during new account opening. The workflows then store necessary data in a compliant storage solution, easing internal compliance checks or dreaded SEC audits.

License and Registration Validation
New account opening is also a time when due diligence checks should be conducted to ensure that advisors are properly licensed in the states in which they are conducting brokerage or advisory business.

It may seem obvious that if an advisor doesn’t have the proper authorization to do specific business in that specific area, then the account opening process should be halted—but this is a step that could be overlooked without the correct checks in place. Completing this validation step means looking at the kind of license (Series 7, 63, 66, etc.) as well as validating that an advisor holds both proper and current registration.

License and registration can sometimes fall through the cracks. Optimizing the process by creating an easy-to-complete workflow every time a new account is opened will help you remember to keep all things active and also create an audit trail to keep your firm in compliance.

OFAC Testing
The U.S. Department of Treasury Office of Foreign Assets Control (OFAC) requires that firms check names against watchlists to ensure your clients are not money launderers, international criminals, or even possibly terrorists.

Unless you work with clients who work internationally, the process is often the most forgotten of the three. And even for those who have a lot of clients who fit that definition, OFAC testing tends to be very manual and, therefore, tedious. It also almost exclusively takes place after an account is already opened.

Being able to run automatic OFAC compliance testing as a new account is opened is optimal for all parties. Integrations like the one between Skience and Electronic Verification Systems (EVS) can conduct OFAC testing at account opening and also allow for ongoing surveillance.

Optimize Your Oversight with Skience

Skience offers not only a RegTech solution that optimizes your new account opening compliance oversight but also an industry-leading enterprise platform that can be configured to meet the unique needs of your wealth management firm, including efficiently unifying your tech stack, increasing back-office and advisor productivity, and delivering a great client experience. Schedule your personal demo today.