Know your client
Know your client (KYC) rules are intended to protect investors and advisors by having advisors collect information about each client to help determine if recommendations are suitable.[1]
The Canadian Investment Regulatory Organization (CIRO) oversees investment firms and mutual fund firms, called Dealer Members, in Canada. It has rules for both investment firms (the former IIROC rules) and mutual fund firms (the former MFDA rules) and guidance notes about KYC.[2][3]
The theory behind the Know Your Client form is based on the view that the more an adviser knows about a client, the better he or she can serve them.[4]
This applies whether or not the trades are the result of recommendations by the firm’s staff.[citation needed] Another aim of the KYC rules is to help dealers comply with anti-money laundering regulations.[2]
Information required
In order for your firm and advisor to comply with the Know Your Client rule, you will be asked to provide and keep up to date the following information:[1]
- martial status
- date of birth (to determine age)
- occupation; if you are retired, your occupation before you retired
- income and net worth
- number of dependents
- risk tolerance, your willingness to accept investment risk and your ability to withstand financial losses
- investment objectives, why you are investing or what you intend to use your investments for
- investment knowledge and experience
- time horizon, how long you expect to keep the majority of your account invested to reach your investment objectives
See also
References
- ^ a b The “Know Your Client” rule, Investment Funds Institute of Canada, viewed February 23, 2025
- ^ a b Canadian Investment Regulatory Organization, Know-your-client and suitability determination for retail clients (for investment firms), Guidance Note GN-3400-21-004, December 17, 2021, viewed February 23, 2025.
- ^ Canadian Investment Regulatory Organization, Know-Your-Client (KYC) and Suitability (for mutual fund firms), Guidance Note MSN-0069, April 14, 2008, viewed February 23, 2025.
- ^ Know Your Client: The Importance of an Accurate KYC, Boomer & Echo, May 9, 2017, viewed February 19, 2020
External links
- Opening an Investment Account: A Guide for Investors, CIRO brochure