AFME targets standardised due diligence

AFME’s due diligence questionnaire provides a standardised set of questions for sub-custodians.
By Paul Walsh
The Association for Financial Markets in Europe (AFME) has published a new due diligence questionnaire with a view to standardising and simplifying the process of completing future requests to sub-custodians.

Previously, sub-custodians responded to clients’ individual questionnaires, which were inconsistent in the questions outlined and covered many of the same risk themes and due diligence topics.

Consensus was built to simplify the process of evaluating sub-custodians at the network managers (NeMa) conference in 2015. The AFME post-trade board subsequently created an AFME task force, comprising about 20 network managers, with a view to producing a harmonised questionnaire.

The work was coordinated by a group of European and international banks with operations in Europe that issue and receive proprietary questionnaires to check procedures for safely holding securities and cash.

The harmonised questionnaire provides an agreed set of questions and simplification of the process for all parties.
“Our industry is delighted that AFME took the lead in addressing this long-running and increasingly burdensome issue,” said Alan Cameron, global solutions sponsor for clearing and custody services at BNP Paribas Securities Services and chair of the AFME due diligence questionnaire task force.

“We are grateful to all the banks that contributed to this project and look forward to working with them to ensure the maximum usage in 2017 and the years ahead. Whilst getting the questions agreed amongst ourselves is important, the success of this project will be measured by usage across our industry.”

The questionnaire will be reviewed by AFME in the third quarter of 2017 to reflect any regulatory changes or major themes which develop over the coming year.