The Know Your Client Process Flashcards
7 cards from real IFC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 The Know Your Client Process flashcards as text
Under IIROC and MFDA rules, how frequently must a dealer member update a client's KYC information at minimum?
Answer: Annually
Dealer members must update KYC information at least annually to ensure client information remains current and accurate.
A client refuses to provide income information during the KYC process. What is the most appropriate course of action for the registered representative?
Answer: Open the account and note the refusal in the file
A registrant may open the account while documenting the client's refusal, though this limits the suitability assessment that can be performed.
Which of the following best describes 'investment knowledge' as a KYC factor?
Answer: The client's understanding of how various financial instruments work
Investment knowledge refers to the client's understanding and familiarity with financial instruments, not tenure or credentials alone.
A client's risk tolerance questionnaire indicates 'conservative,' but the client verbally insists on buying high-risk equities. What should the representative do?
Answer: Document the discrepancy and discuss it with the client before proceeding
The representative should flag the inconsistency, discuss it with the client, and update the KYC file if the client's true risk tolerance has changed before executing the trade.
Which life event would most likely trigger an immediate KYC review outside of the regular update cycle?
Answer: A client retires and their income drops significantly
Retirement causing a significant income reduction materially changes a client's financial situation and risk capacity, requiring an immediate KYC update.
What does 'time horizon' refer to in the KYC context?
Answer: The period over which a client expects to hold investments before needing the funds
Time horizon is the expected length of time a client plans to invest before needing to access the funds, which directly influences suitable product selection.
Under Canadian securities regulation, who bears ultimate responsibility for ensuring that KYC information is collected and kept current?
Answer: The dealer member firm
The dealer member firm bears ultimate regulatory responsibility for maintaining current and accurate KYC records for all client accounts.