Engagement Summary
In late-2020, Monticello Consulting Group (Monticello) patent with the Business Control team at a leading U.S. financial institution to conduct an end2end assessment of the Latin America (LATAM) business to ensure operational compliance with relevant jurisdictional client protection rules. This program was initiated by the client to determine whether their affiliate LATAM entities should be onboarded into the greater global client protection program which would bring forth additional governance and standardization of practices across all regions involved. The goal was to perform a deep-dive analysis to identify areas of non-compliance and/or weakness in controls, propose solutions to address gaps, and determine whether the risk and impacts identified warrant the respective LATAM entities to be included in the Global Client Protection Program.
The Monticello team was brought in to establish and lead a program structure to ensure alignment with global compliance. The Monticello team introduced a three-pronged approach to drive success:
Definition and Planning - Reviewed the scope of applicable entities in LATAM to assess risk. Additionally, the team identified key processes and associated stakeholders from applicable process owners.
Review and Assessment - Partnered cross-functionally with the regional regulatory, compliance, and legal team to identify all relevant client protection regulations. Using the in-scope regulations as the foundation for our end-to-end review, the team held deep-dive review sessions with process stakeholders to align processes against regulatory requirements.
Proposed Solutions - The team presented their key findings back out to the greater global client protection program which outlined the areas of weakness or non-compliance, categorized them into the process or tech-aligned enhancements, and established a remediation plan to address and mitigate these gaps.
The region proved challenging due to incongruent procedures and data gaps. Monticello’s Financial Services Advisory team brought the requisite industry expertise, frameworks, stakeholder management, and leadership skills to achieve the client’s ambitious timeline.
Case Study Detail
PROJECT BACKGROUND
Client protection rules are a top priority for any broker entity and require a registered broker to protect and maintain custody of client assets and safeguard client money. In addition, the rules require the broker to segregate the firm’s proprietary assets from client assets to prevent improper use. Although regulations vary across regions, there are benefits through the standardization of common practices and alignment to a global approach in the handling of certain processes such as onboarding, treatment of segregated accounts, and client assets/money protection. For these reasons, the Global Client Protection Program extended its scope into LATAM to determine whether there is a business need to incorporate these entities based on their overall risk and impact.
ENGAGEMENT OBJECTIVES
Program Management
Implemented a program governance structure for a large global bank and managed the overall program plan, deliverables, and timeline. Coordinated with key stakeholders across finance and operations to align and reconcile their process, risks, and controls with jurisdictional regulatory requirements.
Created program management templates used to monitor the progression and status of each key-process throughout the various phases within the program
Identified key risk areas where there were insufficient client asset controls in place and created high-level process flows to pinpoint areas of weakness or non-compliance
Ensured stakeholder engagement and buy-in for proposed recommendations and downstream changes to their underlying operational model
Financial Risk and Control
Reviewed jurisdictional regulatory requirements and implement business controls. Analyzed existing business model, identified opportunities for improvements, and proposed solutions to address key risks.
Partnered with the legal and regulatory team to conduct a full assessment of how the regulation governs the opening of segregated accounts, client asset segregation, and client money calculation processes
Created a standardized process inventory tool to reconcile the regulatory requirements with the individual process currently in place to achieve compliance
BUSINESS VALUE
Monticello Consulting Group is a trusted partner serving the financial services industry with a consistent track record of helping clients reduce their regulatory risks while improving operational efficiencies. By working with our client to successfully translate complex global regulatory requirements into effective business solutions, Monticello implemented the necessary risk and control framework to ensure compliance in LATAM. Monticello brought to this complex initiative by providing the client with the necessary leadership in both stakeholder and program management to lead this program to completion. Our team conveyed strong governance standards, regulatory knowledge, and end-to-end process understanding to ensure effective change management while meeting the client’s strategic objectives.
