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Client Onboarding KYC Best Practices
A colleague asks Mpho what 'Know Your Client' (KYC) actually means in a financial-services firm. Which answer is correct?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) Identifying and verifying the client’s identity and understanding their financial needs, objectives and risk profile.Correct
- b) A marketing technique used to personalise communication with clients.
- c) A social-media strategy for growing the adviser’s client network.
- d) An annual customer-satisfaction survey sent to existing clients.
Why this is the answer
KYC has two strands: the FIC Act duty to identify and verify identity (CDD), and the FAIS duty to understand the client's needs and circumstances (the needs analysis). It is a compliance and suitability process, not marketing or a survey.
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