This is complex where financial institutions maintain different databases for reference, customer and counterparty data, sometimes across different business lines, products and regions. It is not uncommon to have more than a dozen different databases storing either reference, customer or counterparty data in incompatible formats. Therein lies the compelling imperative for cleansing, consolidating and enriching this data to create a single data repository containing a "golden copy."
For example, identifying a company's relationship to sister corporations under the same parent name may be ambiguous. Data from various sources may list the business and legal names in different ways. Such discrepancies create headaches for a firm's compliance department, which must ensure that all data relating to a counterparty and its associations is correctly identified and not linked to a criminal activity watch list or at risk of default on the terms of the transaction. Ignorance and poor data governance is no excuse with today's regulators, who are empowered to levy hefty penalties for compliance violations, or require risk-weighted capital be set aside to offset insufficient operational controls.
- Page 2: What Data Is at the Heart of the Problem?
- Page 4: Resolution Lies in Centralization
- Page 5: Know Your Customer, Know Your Exposure