MCI - Management of Confl icting Interests
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MCI – Management of Conflicting Interests Identify real or potential conflicting interests confidently and with greater sophistication Financial Software
2 I MCI ‒ Management of Conflicting Interests
institution, these conflicts cannot When despite such measures
be ignored but rather must be conflicting interests cannot be
identified and handled correctly. avoided, then the bank is ultimately
bound to disclose the conflicting
Conflicting interests may arise interests to the customer.
between a bank and its customer,
between other businesses, within The software solution Management
senior management, between of Conflicting Interests (MCI) from
employees and/or other intercon- Bosch Financial Software helps you
nected individuals. to more confidently recognize
actual or potential conflicting
To recognize and treat conflicting interests and with greater sophisti-
interests, each bank must take cation than with manual methods
lasting, effective organizational or simple checklists. In addition,
precautions. When a juncture of it ensures complete documentation
potentially opposing interests of identified conflicting interests
Conflicting Interests within cannot be averted, measures to and tracks the measures taken.
Financial Service Providers avoid an actual conflict of interest
must be taken. Among these are
Banks and other financial service physical separation, separation
providers are confronted daily with of reporting lines, delegation of
potential conflicting interests. While power in areas of authority, and
conflicts can often be due to the the transfer of tasks to another
wide range of activities within an business unit.
MCI ‒ Management of Conflicting Interests I 3
Observing Legal Points Following is a summary of the For financial service providers
requirements of the MiFID in regard outside the European Union, such
In the European Union, the Markets to conflicting interests: as in Switzerland, the MiFID is
in Financial Instruments Directive becoming increasingly important.
(MiFID) regulates conflicting inter- ▶ Conflicting interests are open Since 1 January 2011 the basic
ests in business relations in the to scrutiny companywide to be provisions have changed in
area of investment services. ascertained and documented. Switzerland, because of revised the
Lugano Convention. In cross-border
In Germany the implementation of ▶ Conflicting interests must be business, the provisions of MiFID
the directive took place at the end supported by measures. are applicable between Swiss banks
of 2007 through modifications to and their German customers.
the Wertpapierhandelsgesetz ▶ The so-defined measures are to
(WpHG), the Kreditwesengesetz be implemented.
(KWG) and the Börsengesetz
(BörsG), as well as supplementary, ▶ Measures regarding conflicting
concrete regulations of the Bundes- interests must be regularly
ministeriums der Finanzen and the monitored and updated.
Bundesanstalt für Finanzdienst-
leistungsaufsicht (BaFin).
4 I MCI ‒ Management of Conflicting Interests
Quickly Detect and Manage bly defined by the system configura-
Conflicting Interests tion and be made available. When
necessary, therefore, it is possible
The basis for the identification of through MCI to define further types
potential conflicting interests in of circumstances.
MCI is a detailed accounting of
relevant activities, as well as the
circumstances within the bank. Typical Types of Circumstances:
Particular attention is given to the
▶ An employee receives a
areas of investment advice, propri-
gift from a customer
etary trading, financial portfolio
management, corporate financing, ▶ An employee gives a gift to
underwriting and placement of a customer
securities, as well as mergers and
acquisitions. ▶ An employee makes credit
decisions for a customer
Depending on the business model
▶ An employee takes charge
and product portfolio of the bank,
of mandates for a company
MCI can also give attention to
additional, more specific types of ▶ An employee performs part-
information, which also produce time work for the company in
potential conflicting interests. The addition to working for the
MCI solution is designed so that financial institution
types of circumstances can be flexi-
MCI ‒ Management of Conflicting Interests I 5
Manual Data Entry and Automatic ▶ General time period in which the
Importing of Information relevant circumstances occur
Relevant conflict of interest circum- ▶ Description of the circumstances
stances can be manually input in
MCI as well as imported automati- ▶ Other information
cally. Manual data collection can
be done either locally by individual As an alternative to manual input, it
employees (as direct notifications), is possible to import already exist-
or centrally through the Compliance ing data into the system automati-
department. Sample data collected: cally. Examples include: a list of
investment companies where the
▶ Declaration to the employee and/ bank holds a significant interest, a
or, if necessary, additional list of clients and asset declarations
connected parties that the employee of the bank
presents such as mandates, being
▶ Types of circumstances and a member of the board of directors
parameters for further specifica- for another company, or a list of
tion. That includes e.g. consult- potential clients in the sales
ing mandates in the area of pipeline which has impending
mergers and acquisitions and business with another company.
parameters for giving advice to a
company acquiring a business
6 I MCI ‒ Management of Conflicting Interests
After that, only new or changed
information is taken into account
for further comparison.
The rule technology of Visual Rules
and the use of the detailed informa-
tion about the particular circum-
stances allow for an intelligent
examination. This is generated only
for the configurations that match
and have a potential for conflict.
Irrelevant combinations of circum-
stances can be excluded in advance
and under adherence to due
Intelligent Examination diligence.
with Visual Rules
Moreover, the logic depicted in the
On the basis of the collected and graphical rule models can be easily
consolidated information, MCI adapted to the particular needs of
enforces an automatic examination the institution as well as expanded
in order to determine potential to the individually defined types of
conflicting interests. Initially, all circumstances.
existing information in the system
is compared against each other.
MCI ‒ Management of Conflicting Interests I 7
Dealing with Potential Conflicting Interests at a Glance
Manual Data
Database
Entry
Audit Proof Documentation
Continual Monitoring
Compliance Officer
Automatically
Importing Informa-
tion, e.g., List of Potential Conflicting Interests
Declarations,
List of Equity Workflow Integration
Participants,
Sales Pipeline
Front-End Application
„ Clarification
„ Scrutiny8 I MCI ‒ Management of Conflicting Interests
Automatic Transfer of Matches
into Worklists Possible Measures for an Actual Conflict
of Interest:
The matches scored by the system
are automatically transferred into ▶ Physical separation
the internal case management
▶ Separation of reporting lines
and appear on the Compliance
Officer’s worklist for clarification. ▶ Delegation of power in areas of authority
Where it makes sense functionally,
the system summarizes multiple ▶ The transfer of tasks to another business
matched-pair hits together in a unit
case. Thus, the total number of
▶ Training and/or sensitizing of employees
processes are reduced. The
Compliance Officer evaluates the ▶ Disclosure, as the ultimate measure
case management whether there
is an actual conflict of interest All inputs and changes within the framework
and, accordingly, documents the of case processing, as well as the preceding
measures to be taken. If need be, data collection of circumstances, are automati-
the available list of measures can cally logged and auditable.
be adapted or extended by configu-
ration.MCI ‒ Management of Conflicting Interests I 9
Management of Conflicting Modules of the Compliance Suite
Interests (MCI) Integrated in the
Compliance Suite
Compliance Suite
MCI is the newest module in the
MLDS NMC NMT
Compliance Suite from Bosch Money Laundering Name Matching Name Matching
Financial Software. It is built on the Detection System Customer Transaction
building block principle so that all
Risk-based monitor- Automated identifica- Examination of
functions can be used in a standard ing of money launder- tion of PEPs and other transactions against
interface and multiple systems do ing, considering the suspicious persons embargo and
KYC Profile/ Customer with respect to their sanctions lists before
not need to be maintained. This
Due Diligence risk potential, even at execution
makes for a lean IT infrastructure, the account opening
reducing overhead.
MAID FDS MCI
Market Abuse & Insider Fraud Detection Management of
Dealing Detection System Conflicting Interests
Monitoring of insider Detection of fraud Handling of
trading and detection patterns in the conflicting interests
of market abuse application with a and tracking the
plausibility check measures taken10 I MCI ‒ Management of Conflicting Interests
In Summary:
▶ Intelligent discovery and
intervention of potential
Conflicting Interests
▶ User-defined types of
circumstances are delin-
eated and supplemented
▶ Adopted measures are
documented and tracked
▶ Auditable Dokumentation
▶ All-in-One: A single user
interface and worklist for
the different Compliance
ModulesMCI ‒ Management of Conflicting Interests I 11
Bosch Financial Software, a subsidiary of the Bosch The Bosch Group is a leading global supplier of
Group designs, develops, markets, and implements technology and services. According to preliminary
innovative software solutions and technologies for figures, its roughly 290,000 associates generated
banks and insurance companies worldwide. Fields sales of 48.9 billion euros in 2014. Its operations are
covered by the company include credit and risk divided into four business sectors: Mobility
management, compliance, client management, claims Solutions, Industrial Technology, Consumer Goods,
management as well as specific process solutions for and Energy and Building Technology. The Bosch
insurance companies. Group comprises Robert Bosch GmbH and its more
than 360 subsidiaries and regional companies in
Bosch Financial Software employs some 100 associ- some 50 countries. If its sales and service partners
ates at locations in Immenstaad (Germany), Chicago are included, then Bosch is represented in roughly
(USA), and Singapore. 150 countries. This worldwide development,
manufacturing, and sales network is the foundation
for further growth. In 2014, Bosch applied for some
4,600 patents worldwide. The Bosch Group’s strate-
gic goal is to deliver innovations for connected life.
Bosch improves quality of life worldwide with
products and services that are innovative and spark
enthusiasm. In short, Bosch creates technology that
is “Invented for life.”
More information can be found at Additional information can be accessed at
www.bosch-fs.com www.bosch.com, www.bosch-press.com,
http://twitter.com/BoschPresseBosch Financial Software
EMEA USA Asia & Pacific
Ziegelei 5 161 N. Clark Street
88090 Immenstaad Suite 3590 11 Bishan Street 21
Germany Chicago, Illinois 60601/USA Singapore 573943
Tel. +49 7545 202-400 Tel. +1 312 368-2500 Tel. +65 6571 2220
Fax +49 7545 202-401 Fax +1 312 268-6286 Fax +65 6258 4671
info-de@bosch-fs.com info@bosch-fs.com info-sg@bosch-fs.com
www.bosch-fs.de www.bosch-fs.com www.bosch-fs.sg
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