A firm gets its licence approved and wants the book under the new company by quarter end. Someone proposes the obvious: repoint the accounts, update the footer, send a notice. That plan ends with client money sitting in an account belonging to a company the client never contracted with, which is the exact fact pattern that turns an administrative project into an enforcement matter.
Client relationships do not transfer by announcement. Each one is a contract between a named client and a named entity, and moving it requires either the client's agreement or a legal mechanism that substitutes one party for another with proper notice. Which mechanism is available depends on the law governing the agreement and on both regulators involved.
Why firms migrate in the first place
Three reasons cover most cases. A licence has been granted and the offshore book is being brought onshore, the route described in migrating from an offshore registration to a regulated entity. A licence is being surrendered or has lapsed and clients must land somewhere. Or a group is restructuring so that regulated and unregulated business sit in different companies, the shape covered in two entity broker structures.
The reason matters, because it sets the deadline and how much of the timing you control. A voluntary restructure can be sequenced over months. A licence surrender runs on the regulator's clock, and the wind down conditions attached to it usually dictate the order of operations.
Consent is the whole job
The receiving entity must onboard each client as its own client. That means its own client agreement, its own risk disclosures, its own categorisation of the client, and its own identity and source of funds checks under its own AML programme. You cannot inherit a KYC file wholesale and call the obligation discharged, although in many regimes you may rely on documents already held provided you obtain them, review them against your own standards and record that review.
Expect a large share of the book to be dormant and never to respond. Plan for it. The usual approach is a notice period with a clear explanation of what changes, an affirmative acceptance step in the portal, a reminder sequence, and a defined treatment for non responders: no new positions, existing positions closed or held under the old entity until closed, withdrawals honoured. What you cannot do is move their money because the deadline passed and treat silence as agreement, unless the governing law and the original terms genuinely allow it and counsel confirms.
This is a description of common practice, not legal advice. Transfer mechanics, notice periods and permissible reliance on existing checks differ by jurisdiction and by the terms of your existing agreements. Instruct counsel in both jurisdictions before you send the first notice.
Money, positions and the sequence that avoids a gap
The hardest part is not the accounts, it is the balances. Client money sits in segregated accounts held by the transferring entity at named banks, and those accounts belong to that entity. Moving funds requires the receiving entity to have its own segregated accounts open and acknowledged by the bank first, which is frequently the item that delays the whole project, since bank onboarding for a newly licensed firm runs on its own timetable.
Open positions add a second constraint. A position is a contract with the transferring entity, backed by its hedging or its own risk book. It cannot simply reappear under a different counterparty. The three practical routes are to close positions at a stated cut off, to keep the old entity alive in run off until positions expire naturally, or to novate positions with the client's explicit agreement and matching arrangements on the liquidity side. Each has cost. The first annoys clients, the second extends the period you carry two sets of regulatory obligations, the third is the cleanest and the slowest.
Whichever route, the sequence is fixed: receiving entity licensed and banked, terms and disclosures approved, portal acceptance flow live, client notices issued, acceptance collected, positions handled, money transferred client by client with a reconciled statement each side, old entity reconciled to zero. Reconciliation to zero is the step that proves the job was done, and it is the one auditors read first.
Data, not just money
The receiving entity needs the history. Trade records, statements, communications, complaint files and AML records all have retention obligations that survive the migration, and the obligation follows the records rather than the company. A transfer of personal data between two group companies is still a transfer under data protection law and needs a lawful basis, a controller to controller agreement where appropriate, and a privacy notice that tells clients what is happening. The overlap is covered in data protection for trading firms.
Operationally this is where CRM choice shows. A system that can hold two entities, keep separate ledgers, issue statements under separate letterheads and record which version of which agreement each client accepted turns migration into a controlled process. One that cannot forces manual work at exactly the moment when manual work is least safe. We built entity awareness into the Broker CRM for this reason, after watching firms try to do it with spreadsheets.
What the regulator asks for afterwards
Assume you will be asked to evidence, per client, the date and version of the agreement accepted, the AML review performed by the receiving entity, the balance transferred and the reconciliation on both sides, the notice sent and the response received, and the treatment applied to non responders. If any of those is missing for a material portion of the book, the migration is not finished, regardless of what the database says. Firms that keep an audit trail from day one produce that in an afternoon. Firms that reconstruct it later usually cannot.
"You are not moving accounts. You are asking thousands of people to sign a new contract with a company they have never heard of, and most of them will not open the email."
— Roman Onta, Executive Director, SINGUARD
Key Takeaways
- A client relationship is a contract with a named entity, so migration needs consent or a proper legal transfer mechanism, never a silent database change.
- The receiving entity must onboard each client under its own agreement and its own AML programme, even where it may rely on existing documents.
- Segregated accounts at the receiving entity must be open before any money moves, and open positions need closure, run off or agreed novation.
- Evidence per client of the accepted agreement version, the balance transferred and the reconciliation is what proves the migration actually happened.
Frequently Asked Questions
Can clients be moved to a new entity without asking them?
Generally no. The client contracted with a specific company, and substituting the counterparty needs their agreement or a transfer mechanism permitted by the governing law and the existing terms, with proper notice. Some regimes provide court sanctioned or statutory transfer routes, but these are formal processes with their own conditions. Take advice in both jurisdictions.
What happens to clients who never respond to the migration notice?
Define the treatment in advance and state it in the notice. Common practice is to stop new positions, honour withdrawals, and keep the relationship under the original entity until positions are closed or the account is settled. Treating silence as acceptance is only safe where the law and the original terms clearly permit it.
Does the new entity have to redo KYC on every client?
It has to satisfy its own obligations. Many regimes allow reliance on documents already held if you obtain them, assess them against your own standards and record that assessment, and refresh anything stale or below your risk appetite. Inheriting a folder without reviewing it is not a defence.
About the Author
Roman Onta is an Executive Director at SINGUARD. He builds the Prop Firm CRM, the Broker CRM, Scalegram and CopySignals side by side with his brother Alex Onta, and he helped on the design of eTrader, the division Alex built and leads. His ground is worldwide payment processing, AML compliance and the corporate structures brokers are built on, work the two of them carry together, shaped by executive roles in the UAE and international corporates. He lives and works in Dubai for most of the year. Meet the executive duo leading Singuard's five divisions.