Customer Onboarding, KYC, and Suitability
Key facts on CIP requirements, customer profiling, suitability obligations, and Regulation Best Interest.
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Questions Covered in This Set
11 cards to master
What four items must a CIP collect for a natural person?
Name, date of birth, physical address, and taxpayer ID number (SSN or passport/government ID for non-resident aliens).
How long must identification records be kept?
Five years after the account is closed.
Whose signatures are required on a new account form?
The registered rep who opened it and a principal who approved it — the customer's signature is NOT required.
Which accounts require a customer signature?
Margin (margin agreement), options (options agreement returned within 15 days of approval), and discretionary (limited power of attorney).
What does FINRA Rule 2090 (KYC) require?
Reasonable diligence to know the essential facts about each customer — to service the account, act on authorizations, and know who has authority.
Name items in the financial profile.
Annual income, net worth, liquid net worth, tax bracket, existing holdings and current investments.
Name items in the non-financial profile.
Age, marital status, dependents, occupation/employment, investment experience, risk tolerance, time horizon, liquidity needs.
What are FINRA Rule 2111's three suitability obligations?
Reasonable-basis, customer-specific, and quantitative suitability.
What are Reg BI's four obligations?
Disclosure, Care, Conflict of Interest, and Compliance.
Who is a 'retail customer' under Reg BI?
A natural person (or their legal rep) using the recommendation for personal, family, or household purposes.
What two special customer disclosures must be flagged?
Employment at another broker-dealer (notify employer, duplicate confirms on request) and officer/director/10%+ shareholder status of a public company.
