Regulation, Compliance and Tax

Regulation, Compliance and Tax

As a result of the financial crisis, regulatory requirements are continually being increased (e. g., through EMIR, MiFiD II, BCBC239, Fundamental Review Trading Book). WEPEX supports its customers with concepts and needs-based solutions to effectively meet these requirements.

In addition, changed domestic and international tax regulations pose considerable challenges for market participants. In addition to expertise in the final withholding tax, WEPEX also has specialized expertise in other areas such as FATCA, stamp duty, and is familiar with critical tax issues such as the retention of interim profits.

Selected projects that have been carried out in this environment are listed below:

Tax Topics
  • Major international bank: migration project, merger of two major banks and follow-up project for the further development of the tax settlement system. Creation of specialist concepts and test concepts, as well as definition of test cases and execution of tests in the field of final withholding tax.
  • Public-sector bank: Verification of compliance of the bank’s trading and settlement processes with respect to Stamp Duty Regulations in selected markets (UK, Ireland, Hong Kong, Poland). Project results: Legal analysis, analysis of weak points, and recommendations for action derived from this.
  • Securities transaction bank: Management of the sub-project “Migration/Integration” within the project for the introduction of the final withholding tax. Subjects of the sub-project included the integration of the software for performing the tax calculations (“tributum”) into the existing system landscape, outsourcing of the data center operation of the tax software to a service provider, and the execution of the data migrations (customer master data, class master data, acquisition data, etc.).
  • WP-Transaktionsbank: Program management for several projects covering tax-related requirements (e. g. the Investment Modernization Act, redesign of processes and systems for reinvestment and interim profits, handling of tax-neutral fund mergers as corporate action).
Regulation und Compliance
  • Landesbank (regional state bank): Project management of EMIR and Dodd Frank implementation, management of all IT-related activities including connection to the LCH clearing house for both own business (self-clearing) and the bank’s customer business (client clearing).
  • Global custodian: Separation of a custodian bank from a major German bank and integration into a major European custodian. Overall project management on the German side and report to the client’s German management, further development of group-wide risk and compliance processes as well as a coordinated NCP.
  • Leading institution of the German savings bank organization: Program management function in a multi-program environment. Assumption of responsibility for sales-related topics and topics in investment account management. In addition, responsibility for all overarching regulatory projects such as FATCA and the implementation of UCITS IV and InvMaRisk.
Valuation models & methodology

Complex new regulatory requirements through the recent years force banks, asset managers and other player in the financial markets to re-focus their use of innovative financial products and to enhance their financial engineering and the corresponding valuation modelling. Trading, Collateral Management, Risk Management and Hedge Accounting have to cope with more sophisticated frameworks and environments. Leveraging the strong quantitative background of the highly skilled and experienced senior advisors in the WEPEX advisory board and of specialized partners as well as co-operating with internationally renowned universities, allows WEPEX to enable their clients to use even more sophisticated mathematical models to quantify market and credit risk and optimize risk and return ratios. WEPEX services cover thereby mathematical models to real-time interfaces and tools and regulatory compliance. WEPEX combines business experience and mathematical analysis from traders, structurers, quants and risk managers with the science and methodical and technological best practice.

Selected Project Profile: Implementation of an Independent Compliance Department

 Project Background

  • The client was a subsidiary of an international banking group specializing in custody and custody business, was then purchased by a global custodian (leading European provider) and has since been active as an independent full-service bank in Germany.
  • Since the main staff functions have so far been largely covered by the former parent company, a comprehensive compliance department has been set up in close cooperation with the Federal Financial Supervisory Authority (BaFin) and the new parent company, which includes all areas of responsibility, from money laundering prevention and embargo functionality to the “know-your-customer process,” monitoring of insider trading and monitoring of market abuse.
  • At the same time, all current FATF requirements and the latest BaFin regulations have been implemented.


WEPEX Tasks and Project Approach

  • Analysis of the necessary scope of the new compliance function in the new bank
  • Coordination of the requirements with BaFin and the foreign parent company
  • Preparation of the necessary system selection decisions and preparation of the shortlist and selection criteria
  • Design of concepts for AML, KYC, NCA, insider deals, market abuse, implementation of § 25a KWG, internal and external reporting
  • Coordination of processes with the parent company, process modeling, and optimization
  • Comparison of 2nd level controls within the custodian bank function with the requirements of the parent company and organization of a corresponding department at the bank
  • Personnel and investment planning for the company for the 2009 budget
  • Support in operational tasks of the compliance department
  • Structuring of the new customer process in the bank


  • The close coordination of the project with the corresponding departments of BaFin and the corporate departments has ensured a successful start to the “Big Bang” in the spring of 2009
  • All areas of a compliance department are set up and networked with the operational departments of the bank
  • Further optimization through the additional use of compliance applications followed the project