Definition Know Your Customer

For example the common sense of know your customer rules says a broker should not recommend only risky naked options strategies to a windowed grandmother whose income is supplemented with blue chip stock dividends.

Definition know your customer. Know your customer kyc is a standard banking and stock exchange procedure for identifying and verifying the customer s identity who wants to conduct any financial transaction. The know your client or know your customer is a standard in the investment industry that ensures investment advisors know detailed information about their clients risk tolerance investment. Term short term solvency ratios definition liquid assets for meeting short term obligations as they come due. Know your customer rules make it unethical and against regulations for brokers to recommend investments where the customer is unsuited to absorb the associated risk or loss.

Kyc is used to assess and prevent the risk of illegal activity such as fraud money laundering. Know your customer kyc is the aspect of due diligence that deals with the precise identification of customers. It involves checking personal and business details in order to exclude negative hits such as sanctions lists watch lists and pep lists and to identify ownership relationships and links between companies. Kyc refers to the process used by banks and other financial institutions to collect and verify the identity of existing and potential customers.

Term competition definition or among businesses trying to obtain a larger piece of the same market share. The process of knowing your customer otherwise referred to as kyc is what businesses do in order to verify the identity of their clients either before or during the time that they start doing business with them. The goal of kyc is to prevent the use of banking and exchange institutions by criminals for various purposes. More like customer your know and other financial terms.

The know your customer or know your client kyc guidelines in financial services requires that professionals make an effort to verify the identity suitability and risks involved with maintaining a business relationship the procedures fit within the broader scope of a bank s anti money laundering aml policy. A guideline stated or implied by various securities regulatory bodies which requires that brokers determine the suitability of investments for customers before making recommendations. Although the phrase know your customer may seem insignificant to most people it has a very important meaning in the business world. Kyc processes are also employed by companies of all sizes for the purpose of.

Also called rule 405 or suitability rules.