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Client Onboarding KYC Best Practices
Which ONE of the following statements best describes 'Know Your Client' (KYC) in the context of financial services?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) A marketing strategy to personalize client communication.
- b) The process of identifying and verifying a client's identity and understanding their financial needs and risk profile.Correct
- c) A social media strategy to build a client network.
- d) An annual customer satisfaction survey.
Why this is the answer
KYC is a twofold process: 1) It involves the FIC Act requirement to identify and verify identity (CDD). 2) It involves the FAIS Act requirement to conduct a needs analysis to understand the client's financial situation, needs, and risk profile.
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