Speaking at the SWIFT London Business Forum 2015, bankers and industry experts noted the recent scrutiny of omnibus account structures as part of a global crackdown on transparency, tax evasion and investor policing.</p> Representatives from Deutsche Bank, Northern Trust, Clearstream and Euroclear said calls for change from regulators have been louder in recent months and called for the industry to resist some of the more radical changes.</p> Oliver Goffard, head of group compliance and ethics at Euroclear, said establishing beneficial ownership can be exceptionally tricky and there would be a huge cost to the industry if they pushed for an alternative to omnibus accounts.</p> He said: “Being able to identify beneficial ownership is very difficult. If regulators want to push towards a simpler process … there is a huge risk for organisations and the impact on the capital that will be required. There are many factors that need to be taken into consideration.”</p> Justin Chapman, senior vice president and global head of process management at Northern Trust agreed.</p> He added: “The repercussions of that simple solution could be huge. The whole infrastructure that we operate is built on multiple layers of omnibus structures.”</p> “Even significant market infrastructure [developments] like T2S are built around omnibus structures. I think the cost to the industry… would be huge.”</p> Omnibus accounts are favoured by the securities industry because they offer lower transaction costs, economies of scale and blocks of liquidity. However, regulators have voiced concerns that they can mean that it is not always possible to identify the beneficial owner and can therefore lead to vulnerabilities in the system.</p> The debate over omnibus account usage has changed significantly since the credit crisis. A report from 2004, shows that the International Organisation of Securities Commissions (IOSCO) did not ask custodians to look at the owners of omnibus account structures.</p> However, this changed in 2009, when SWIFT asked its members to ensure they know who is the payer and payee of any payment.</p> Mark Gem, chief compliance officer and executive board member at Clearstream, recalled the $151 million fine that his company paid to a US Treasury department last year relating to an omnibus account structure used in 2007.</p> He said this should be a warning of the amount of scrutiny firms should now dedicate to omnibus accounts.</p> He said: “My own firm had a run in with the US Treasury. The guidance they gave us was if you are operating an omnibus account, it demands increased security and vigilance.”</p> At the time, the US Treasury’s Office of Foreign Asset Control (OFAC) said the fine should be heeded as a warning to everyone within the industry. Adam Szubin, OFAC director, said: “[The] action should serve as a clear alert to firms operating in the securities industry that they need to be vigilant with respect to dealings with sanctioned parties, and that omnibus and custody accounts require scrutiny to ensure compliance with relevant sanctions laws.”</p>