It refers to a process of detailing all the material information relating to respective currency exchange, transfer, withdrawal, payment, or transfer of payment to an entity or through a financial institution.
Is Financial Reporting Necessary?
With the growing demand for security of personal and organizational data, accountability, and transparency, the European Union and the British government have put in place mechanisms of monitoring all financial institutions to ensure they comply with the regulations to address the concerns raised.
Under the British and EU regulations, financial institutions are mandated to report on all their financial transactions or dealings. The core objective of financial reporting is to monitor transactions for offenses related to money laundering, tax evasion among other criminal activities that organizations may undertake. On the other hand, financial transaction reporting helps entities to gain a clear insight into their dealings, revenues, expenses, and other key operations. Reporting entities that fail report inaccurate information or fail completely to report are liable for an offense whose consequences may be a fine, imprisonment, or both.
Who Qualifies to Report Under MiFID?
If you are an organization dealing in MiFID eligible securities, you are required to report your transactions to an Approved Reporting Mechanism (ARM). The ARM then passes the reports and forwarding information to the relevant authority such as UnaVista. It is a requirement that such entities validate their data against the most current sources in order to allow for easy identification of under-reporting or over-reporting.
To Whom Do Reporting Entities Send Transaction Reports?
Previously, transaction reports could be sent to the Financial Services Authority (FSA). However, the regime has changed owing to the split of FSA into two separate but collaborating authorities namely the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). Whether you are a bank, a credit union, investment firm, or building society, you are required to send your transaction reports to the Prudential Regulation Authority. In the United Kingdom, the Monitoring Unit (TMU) collects all the reports relating to all reportable financial dealings. It also monitors the firms for compliance with all the regulations and carries out surveillance of all the UK financial markets.
Completeness and Quality of Data
Data to be reported must be checked and validated against current sources to ensure their completeness and accuracy. This allows competent authorities to detect any market abuse and monitor the accuracy of trading information, the type of financial instrument traded, when, how, and between whom it was traded. A transaction report will include but not limited to the following:
• Information relating to the instrument traded
• The firms undertaking the trade
• The entity buying the instrument
• The data and exact time of the transaction
Now you have the basic knowledge on transaction reporting as guided by the regulations. If you are planning to enter the financial industry with a hope to trade reportable securities, the above information will get you started on a journey to a lucrative investment.
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