CIFC Client Account Management and KYC Flashcards

What is the 'suitability' obligation for mutual fund registrants in Canada?

Answer: Ensuring recommended investments are appropriate for the client's KYC profile

Suitability requires that any recommended investment aligns with the client's objectives, risk tolerance, time horizon, and financial situation collected during KYC.

Which account type allows a Canadian investor to hold mutual funds with tax-sheltered growth and tax-deductible contributions?

Answer: RRSP

An RRSP (Registered Retirement Savings Plan) provides a tax deduction on contributions and tax-sheltered growth until withdrawal.

A client wants to save for their child's post-secondary education. Which registered account is most appropriate?

Answer: RESP

A Registered Education Savings Plan (RESP) is specifically designed for education savings and attracts Canada Education Savings Grants (CESG).

What does the term 'beneficial owner' mean in the context of client accounts?

Answer: The individual who ultimately owns and benefits from the assets in the account

The beneficial owner is the person who has the real economic interest in the assets, even if the account is held in another name.

Under anti-money laundering (AML) rules, which of the following triggers enhanced due diligence for a client?

Answer: Being identified as a Politically Exposed Person (PEP)

Politically Exposed Persons (PEPs) require enhanced due diligence under Canada's Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

What is the maximum annual TFSA contribution limit concept (as set periodically by the federal government)?

Answer: A fixed annual dollar amount indexed and set by the government each year

The TFSA annual limit is a fixed dollar amount set by the federal government, which has varied over time from $5,000 to $10,000 depending on the year.