GlobeTax Brings Risk Reduction and Automation with ISO 20022

 

SIBOS, the annual banking and financial conference, given the times, has this year gone entirely digital. In line with that new format, this year’s themes focus on how digitization is driving smart finance. In a similar vein, earlier this week GlobeTax and DTCC co-hosted a webinar on how leveraging ISO 20022 Messaging has optimized the withholding tax relief process and how it could do the same for other corporate actions.

A year ago, GlobeTax enhanced its MIDAS relief at source service with ISO 20022 Messaging, allowing for the full automation of DTCC CA Web elections. Automating the instruction process eliminates MIDAS users’ requirements to manually submit instructions to DTCC, reducing risk and time spent on this previously labor-intensive process.

This aligns well with another of SIBOS’s major themes this year: reducing risk in a digital environment. Usage of the ISO 20022 standard allows information and data to be drawn directly from the system, automating larger segments of the process. Standardized messaging mitigates risk, such as transcription errors resulting in incorrect share elections or exemption rates. Having a standardized process in place also ensures that clients do not suffer due to failure to perform or submit an election given the large volume of transactions that they must elect.

ISO 20022 Messaging also mitigates the reputational risks that come with those types of errors. Messaging standards enable volume processing to occur efficiently and systematically, offering checks and balances at every step of the tax reclamation process, including by fully validating data against that is stored with counterparties up and down the custody chain. Because of this, there is longstanding support for these standards from the SIBOS community and DTCC, who found the flexibility offered by ISO 20022 a natural fit for tax elections.

To further capitalize on this innovation, GlobeTax collaborated with DTCC in January 2020 to automate the segregation of beneficial owners based on entity type or country of residence, using ISO 20022 to automatically funnel election breakdowns into CA Web. By automating these processes, ISO 20022 allows financial institutions to reduce the time spent manually inputting information into the DTCC portal, which in turn reduces the operational and management time spent reviewing and approving individual elections.

Paula Starzec, Senior Operations Analyst at Comerica Bank and participant on GlobeTax’s webinar panel on ISO 20022 Messaging, commented on the benefits: “One of the things that we thoroughly enjoyed is mitigating our risk by entering our elections directly [using ISO 20022 Messaging]. When it first started, we watched very closely to make sure that the accuracy was there, and we have since moved away from that, as we know it’s there”.

As one of the first organizations to adopt ISO 20022 and the first to send election instructions to DTCC using the standard, GlobeTax has seen numerous benefits since its implementation, with risk reduction, greater efficiency and time management just a few among them. Despite this year’s many disruptions, GlobeTax continues to innovate for our clients.