CASS is a set of rules and regulations followed by a firm while dealing with the client’s money or safe custody assets as part of a business contract. These client asset rules help to keep the clients money on the safer side if the firm fails in running the business and exits the market. On the other hand, it helps to reduce the financial loss by identifying, assessing and mitigating risks.
The firms holding and controlling client’s assets must be reporting the status and value of their assets to the brokers, custodians and investment banks.
Protection of client’s money and assets has become a pressing issue in these days. As a result, the Financial Conduct Authority (FCA) has introduced certain standards to govern the conduct of investment firms when handling client’s money and safe custody assets. The primary aspect of implementing FCA CASS rules is to protect the client’s money and assets.
With regards to the financial crisis of 2007-09, the FCA has made significant changes to the rules, which required the investment firms to provide clear reports on handling client’s funds and tracking the location of assets. Henceforth, it is mandatory for the investment firms to have robust client asset management systems to control and prevent the occurrences of fraudulent events and reputational damage to the firm.
The CASS framework solution supports compliance with FCA CASS rules associated with non-European Economic Area (EEA) legal entities. The framework ensures that any overlaps between FCA rules and client's money/ asset protection rules are understood.
The primary objective of implementing CASS framework solution is:
To protect clients of investment firms from becoming insolvent.
To make sure client’s assets are not being used by firms until and unless the clients have agreed to it.
To reduce the risk of loss due to inadequate administrative procedures and negligence.
Promote operational efficiency across entire organization through standardized approach
Improvement in business through greater analysis and reporting
To allow firms to stay abreast of regulatory standards in the management of client’s funds and assets
After successful implementation of CASS framework solution, the clients now have a scalable means of monitoring and reporting on client’s assets while compliant to all the policies prescribed by FCA.
Banks have benefited from the ‘One-stop shop’ to retrieve CASS solution consisting of all the records and documents needed to be furnished to regulators and auditors.
Helps to identify and diagnose any pitfalls related to both client’s money and assets.
Access to interactive technology to support accrual returns and creation of auditable documentation and archiving solutions
CASS monitoring processes which help to identify changes and then be addressed by CF10a-CASS operation function.
Therefore, a successful CASS solution implementation must be accommodated to scale the complexities of client organizations by encompassing the roles, procedures, processes, responsibilities, technologies to meet the CASS regulatory.
Client companies that are the complaint to CASS regulations can go through a huge transformational phase by working closely with the functional experts and business analysts to develop business requirements for future.
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