MiFID, MiFID II and the GDPR (AVG)

Regulation and legislation is an important part of the SCOPE KYC Cloud solution. Working with Hart Advocaten the SCOPE KYC Cloud solution has been checked for compliance with MiFID I, MiFID II and the GDPR (General Data Protection Regulation)

Prevent getting fined

The consequence of lacking a clear solution to the Know Your Customer process in investment management, is that every investment manager has their own way of interpreting and executing this process. This can, often entirely by accident, result in practices which might not conform to the legal requirements. An offence which is usually fined by authorities.

A common trend is the increasing pressure on investment managers to comply with all the legislation and regulation regarding their field of work. An example of this is the introduction of MiFID II (Markets in Financial Instruments Directive, the European investment guideline) in January of 2018. This will lead to increasing pressure on the business model of investment managers as it is a costly and time-consuming process to comply with all the regulations. SMT is working with Hart Advocaten to make sure our products comply with the regulations set by MiFID II

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Continually monitoring the KYC solution

Noëlle Wijnstekers, a partner at Hart Advocaten, is the legal expert with the necessary KYC knowledge to test the SCOPE KYC Cloud solution against the acting regulations. In the future, we will continue to consult Hart Advocaten for legal aspects, and regularly test the SCOPE KYC Cloud solution against acting regulations.

MiFID II is not the only change

The General Data Protection Regulation (GDPR) which will be enforced from the 25th of May 2018 will also increase the pressure on the market. The current guideline regarding the protection of personal data is implemented in the Wet Bescherming Persoonsgegevens (WBP), the Dutch law regarding the protection of personal data. SCOPE’s KYC Cloud solution conforms to the various requirements set by the GDPR.
An example of this is the bilateral use of information (transparency and trueness). The trueness is guaranteed because the client has the option to change his details. The SCOPE KYC Cloud solution has a straightforward set of limitations set according to the relevant laws and regulations. The SCOPE KYC Cloud solution meets a large number of the requirements set by the AVG/General Data Protection Regulation 2018.In addition, several requirements set by the GDPR 2018 will be taken on by Scope Marketing Technology as administrators and the Microsoft Azure Cloud Platform which has been selected as hosting agent for the SCOPE KYC Cloud solution. The Microsoft Azure Cloud Platform is obliged to meet requirements set by the GDPR 2018.

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Primary requirements from the AVG/General Data Protection Regulation

1Transparency: the person whose data is being processed is fully aware, and has given his permission whilst being aware of his rights. By allowing the client full access to his or her stored data, this complete transparency requirement is created.
3Data limitation: only the data which is necessary for the objective of the product can be collected.
5Storage limitation: personal data may not be stored longer than necessary for its purpose.
7Responsibility: the person responsible must be able to show all regulations are met.
9Pseudonymising: a process that encrypts personal data. The process can use the same pseudonym/cypher for a person, which allows encrypted data from multiple sources to be combined flawlessly. This is a big difference with anonymising, where it is not possible to combine multiple data sources due to the data and cyphers being anonymous.
2Limitation: personal data is collected and used for a justified and legal purpose, and is not to be used for other purposes. The SCOPE KYC Cloud solution has straightforward limitations which are set by acting regulations.
4Trueness: it is vital that personal data is correct and stays up to date. By allowing the client to update his or her data it can be ensured that the data is correct.
6Integrity and reliability: personal data needs to be protected from unauthorised access, data loss or destruction.
8Portability/Flexibility: a client can request a transfer of his or her data to a different party, such as a different investment manager.

DISCLAIMER: The SCOPE KYC Cloud solution is software that allows an investment managers employees, and clients, to work through the KYC client databasing process. The KYC databasing questions, which are used, are based upon active regulations such as the MiFID, MiFID II and the General Data Protection Regulation. (Also known as Algemene Verordening Gegevensbescherming (AVG), Dutch authority of personal data) SCOPE does not offer a guarantee.