Know Your Client (KYC) 1 Understanding Know Your Client (KYC) The Know Your Client (KYC) rule is an ethical requirement for those in the securities industry who are dealing with customers during the opening and ... 2 Suitability Rule. ... 3 Establishing a Customer Profile. ...
What is the Know Your client (KYC) rule?
The SEC requires that each new customer provide detailed financial information before opening an investment or banking account. 1 The Know Your Client (KYC) rule is an ethical requirement for those in the securities industry dealing with customers during the opening and ongoing maintenance of accounts.
What are the three components of KYC?
Three components of KYC include the customer identification program (CIP), customer due diligence (CDD), and enhanced due diligence (EDD). The SEC requires that each new customer provide detailed financial information before opening an investment or banking account. 1
How does KYC protect investment advisors?
KYC protects both clients and investment advisors. Clients are protected by having their investment advisor know what investments best suit their personal situations. Investment advisors are protected by knowing what they can and cannot include in their client's portfolio.
