Know Your Client (KYC)
The regulatory and operational requirement that financial professionals collect baseline client information -- identity (legal name, ID, SSN/TIN, address), investment objectives, risk tolerance, risk capacity, time horizon, liquidity needs, source of funds, tax situation, and other holdings -- BEFORE making any recommendation. Mandated by USA PATRIOT Act Customer Identification Program (CIP), FINRA Rule 2090 (Know Your Customer), and the suitability/best-interest standards under FINRA 2111 and SEC Reg BI. KYC data feeds the IPS, the AML monitoring file, and every later suitability analysis. Done well it is the highest-leverage hour of the relationship; done badly it produces panicked calls in the first drawdown.
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Related terms
Anti-Money-Laundering (AML) · Currency Transaction Report (CTR) · Investment Policy Statement (IPS) · Onboarding Workflow · Politically Exposed Person (PEP) · Rebalancing Policy
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