Know Your Customer (KYC)

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Chapters in this video

  1. 0:00 Why KYC applies even to unsolicited-only accounts
  2. 1:54 Reasonable diligence, not absolute certainty
  3. 2:41 The four essential facts the firm must know
  4. 3:41 Opening and maintenance: KYC as an ongoing duty
  5. 5:09 KYC vs CIP: purpose, legal basis, and timing
  6. 6:11 Rapid-fire exam recap

What this video covers

  • Why the Know Your Customer (KYC) rule applies to every account, including unsolicited-only accounts where the customer refuses all recommendations
  • The reasonable diligence standard, and why exam choices using "absolute certainty" or "verify every detail" are wrong
  • What qualifies as essential facts: servicing the account, special handling instructions, authority of persons acting on behalf of the customer, and compliance with applicable rules
  • Why "opening and maintenance" is the load-bearing phrase, and how changed circumstances (new job, inheritance, retirement) trigger an update obligation
  • How KYC provides the foundation for suitability and Regulation Best Interest (Reg BI) obligations
  • The four-way breakdown between KYC and the Customer Identification Program (CIP): purpose, legal basis, timing, and scope
  • Why completing CIP under the USA PATRIOT Act does not satisfy KYC under FINRA rules, and vice versa

Read the full lesson, free

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Read the Free Lesson → free · no signup wall