Skip to main content

65% of FI’s struggle with client identification

08 January 2013, London, UK – In new research published today by Fenergo, the leading provider of client onboarding, client due diligence and FATCA solutions, it was revealed that 65% of financial institutions are struggling to complete the client identification process efficiently due to gapped, siloed, semi-structured or unstructured client data.

The report, The Road To FATCA, is based on a survey that was conducted with financial institutions running the full spectrum of financial services, including investment, corporate, retail and private banks.

According to the findings, the biggest impact of FATCA will be felt in the area of customer due diligence or know your customer processes, with a whopping 79% of institutions expecting FATCA to have either a high or medium impact on CDD / KYC processes (where processes will have to be rewritten, reviewed and/or amended).

In exploring the findings, the author, Fiona Cummins, Fenergo’s FATCA Subject Matter Expert, asserts that institutions that have commenced their FATCA journey are in a better position than those that haven’t simply by knowing the size of the data challenge facing their organisations. “Our survey points to some good news and some bad news. It’s heartening to note that some financial institutions are making real progress in certain areas like client identification and classification, with up to two-thirds of responding institutions claiming to have already commenced these processes. However, some institutions have already identified serious gaps in their data that will have a knock-on effect on compliance with new FATCA regulations. Client information lying in various repositories right across the institution makes the process of identifying, classifying, evidencing and reporting on U.S. persons/entities with account balances that exceed the FATCA thresholds exceedingly difficult.”

The survey also illustrates how financial institutions will expect to collect additional data and documentation as part of the self-certification process, revealing that:

  • 30% of FFIs expect between 5% – 49% of their client base to have to complete self-certification
  • 17% expect over 50% of their client base to complete it
  • 53% anticipate less than 4% of their client base having to self-certify that they are or are not U.S. persons/entities
  • Up to 42% of institutions are either using or plan on using an online portal to collect W-8 and W-9 forms.

“Our advice to financial institutions is to start your FATCA journey as soon as possible,” explains Cummins. “FATCA is very much an exercise steeped in data quality which can impact the ability of the institution to identify, classify and evidence clients displaying U.S. indicia over the monetary thresholds dictated by FATCA. The sooner this is done, the better prepared the institution will be for FATCA, giving them sufficient time to gain compliance with other classification-based regulations using the same technologies”.

The report recommends a four-point plan for financial institutions beginning their FATCA journey:

  1. Use FATCA as a stepping stone to other classification-based regulations (such as LEI, Dodd-Frank, EMIR, MiFID II, Basel III, 4th EU Money Laundering Directive, and other jurisdictional flavours of FATCA that are expected to emerge)
  2. Try to create links between client data and documentation already lying in various repositories by interfacing internal systems to create a more holistic client profile
  3. Use this data to pre-classify clients to reduce the number of clients that will have to be contacted for self-certification
  4. Automate as much of the process as possible and use this opportunity to collect additional data pertaining to other regulatory obligations e.g. CDD / KYC.

–       Ends –


For further information, please contact:

Fiona McLoughlin, Head of Marketing, Fenergo 

T: +353 1 856 5915; E:

About Fenergo

Fenergo is a global provider of client lifecycle management software solutions for investment, corporate, private and wholesale banks. Its award-winning front office solutions include ClientOnboarding Lifecycle Management, Customer Due Diligence / Know Your Customer (CDD / KYC) and FATCA compliance solutions – helping to ensure full compliance with risk and regulatory obligations throughout the entire client lifecycle.

It also offers a Collections & Recoveries solution for management of distressed commercial loan portfolios, as well as Origination & Account Opening and Loan Fulfilment solutions (for the management of collateral, covenants and legal document execution).

Underpinned by a comprehensive Legal Entity Data Management framework, Fenergo’s solutions enable the tracking, merging and grouping together of various identifiers to create a more accurate and holistic picture of the client – enhancing risk management and improving client experience and profitability.