Client Discovery and Account Opening

Client Discovery and Account Opening

• Client discovery and all aspects of the account opening process are covered, including the ongoing procedures for maintaining accurate records.

Key Terms Defined

• Beneficial Owner: A person who ultimately owns or controls an account, even if it's held in someone else's name.
• Cash Account: An account where the client pays in full for transactions.
• Client Discovery: The process of gathering information about a client's financial situation and investment goals.
• Delivery Against Payment: An arrangement where securities are purchased and payment is made on the settlement date.
• Discretionary Account: An account where the advisor has the authority to make investment decisions on behalf of the client.
• Insider: A person who has access to non-public information about a company.
• Managed Account: An account overseen in a continuous manner for investment decisions.
• Margin Account: Require partial payment for purchases.
• Politically Exposed Person: Individuals in positions of public trust.
• Power of Attorney: Grants someone authority over financial affairs.
• The Proceeds of Crime (Money Laundering) and Terrorist Financing Act: Act to help detect and suppress the issue of money laundering and terrorist activities
• Red Flag: A warning signal of potential improper activities
• Registered Account: Is registered in an individuals name with the Canadian Revenue Agency (CRA) as tax deferral plan

Introduction to Client Discovery

• Opening a new account is a critical first step in the client-advisor relationship.
• Enables a review of the client's situation.
• Provides opportunity to gather information for suitable recommendations.
• "Client discovery" involves asking questions and getting to know the client.
• Additional accounts from existing clients offer chances to update information.
• Registered Representatives (RRs) must evaluate and document client backgrounds.
• Information gathered at this stage forms the basis for future recommendations.
• Every client interaction helps the advisor understand the client's particular objectives and constraints.

Opening Accounts Procedures and RR Responsibilities

• RRs are responsible to both the client and the dealer member.
• High integrity and ethical conduct are paramount.
• Standards of conduct provide a framework for client dealings.
• RR's must keep client's interests are of the highest importance.
• RRs must constantly update client information.
• The Know Your Client (KYC) rule requires cautionary advice if an order seems unsuitable.
• Recorded objectives and risk factors must remain suitable.
• The KYC rule is the cornerstone of client dealings.
• It begins during client intake and continues throughout the relationship.
• Dealer members should remain informed of essential client facts like financial circumstances, needs, knowledge, risk profile, and time horizon.
• Collection of client data makes retail client suitability determination possible.
• Suitability involves considering concentration and liquidity of holdings, costs, and alternative actions.

Variables in Client Suitability

• Factors to determine if a proposed trade is suitable include; age, marital status, occupation,income, net worth, the number of dependents, and risk profile.
• Consider investment objectives.
• Accounts should reflect client risk tolerance and capacity to endure loss
• Consider investment knowledge and experience.
• Time horizon must be established.
• The account's current investment portfolio composition, duration, and risk level should be considered
• A client's age and life stage are critical components of an investor's KYC profile.
• Hiring informed advisors is needed to ensure KYC compliance
• KYC obligations are met by advisors applying a robust process, followed up with regular client updates and strategy reviews.
• Senior investors require particularly important follow-ups.

Techniques for Obtaining Client Information

• Lifestyle questions should be documented and includes; planning reirement, fashion and expenses for retirement, expenses and issues.
• Contemplate issues or expenses in retirement.
• Do the clients have Children or grandchildren that are financially dependent.
• Do the clients have a will and a financial power of attorney?
• Face-to-face meetings with clients when completing account applications ensures accurate investor information.
• Encouraging family member of friend at meetings.
• Frequent updates of account information, such as annually.
• The steps and information is needed about clients to determine appropriate investments at the account opening stage.

Client Identification and Anti-Money Laundering

• RRs play a key role in combating money laundering and terrorist financing.
• The same is true for all employees who monitor and supervise daily activities.
• Fulfilling reporting responsibilities under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) is important.
• Not fulfilling reporting responsibilities under PCMLTFA can face either or both a prison term of up to five years and up to a $2,000,000 fine.
• Anti-money laundering and anti-terrorist financing (AML/ATF) procedures integrate into KYC obligations.
• CIRO sets rules for account opening, and dealer members must maintain customer information.
• Procedures emphasize that dealer members request the key facts related to each customer and account.
• Account opening procedures provide risk assessments of clients and their income sources, also assesses activity expected in an account.
• This knowledge helps determine extra client information and documentation.
• Assists to determine if offshore accounts require due diligence and monitoring.
• During client discovery and client relationships you and registered staff can evaluate client behavior from a money laundering perspective.
• Monitoring client behavior allows you to recognize red flags that may indicate terrorist financing or money laundering.
• Report all red flags of possible improper activities.
• The client discovery process and ongoing client interactions are of critical value, not only to the KYC obligation, but also to the prevention of illegal activities.
• The process of client identification and verification is important, there must be a professional judgement.
• Seek help when necessary, open accounts and subsequent dealings of clients.

Red Flags & Due Diligence

• One of an effective toold a dealer member can put in place to help employees relating to AML/ FAT provisions is an effective red flag program.
• Clients may be involved in money laundering and activities can be suspicious if the accounts follow any of the activities during its process.
• Provide inadequate information or supporting documentation
• Documentation that appears altered or coutnerfeit, or all documents have recent issue dates.
• Documents that are photocopies, facsimile images, or electronic reproductions are not certified by an attorney acting on the client’s behalf.
• Attempts to open accounts are used with other peoples names
• Supplying information that seems to be vague or potentially untrue.
• Providing addresses outside the local service area.
• Supplying a post office box or even general delivery or other mail address where normally its a street address.
• Providing a phone number where the client cannot be reached.
• Making inquiries that suggest a desire to avoid reporting.
• Lack of providing the completing and require documentation and is reluctant to continue to supply documentation.
• Inquisitiveness about compliance and anti-money laundering procedures is not allowed.
• Creating accounts with different names or used an alias.
• AML procedures are based on the risk that particular types of client may be involved in the movement of money.
• Use extra diligence with clients from bank secrecy, high levels of corruption jurisdictions or countries.
• Provide greater data and about corporations and trusts, specifically private offshore entitites.
• Pay close attention to the falling clients.
• Clients who deal with cash business practices.
• Clients or their people close with them in a prominent position of public trust.
• Clients who has a history of suspicions transactions filled from their accounts.
• Certain clients in a prominent position of public trust, their immediate or family members and closed associates are referred to politically exposed persons (PEP’s)
• Foreign PEP accounts are extremely worried on money laundering perspectives than that of domestic client accounts.
• The foreign PEP category includes falling personal.
• Any person who is holds has held an office or position.
• That person, spouse, or the child, mother ,brother.
• The spouse or their common-law partner’s mother or father.
• Foreign PEP only hold positions in a national state, not those in Provinces or municipalities.

Monitoring and Compliance

• An account for a freight PEP account must be approved by a senior level within 30 days of opening and be subject to enhanced monitoring.
• Accounts for domestic PEP’s must also be assessed for the risk related to money laundering.
• Anti-money laundering regulations needs that members very the identity and their start date of certain persons that open securities account.
• Ciro's client identification requirements in total, referring to the client KYC, and their expectations of suitability obligations is not exclusive to the identity.
• Account updates and reviews are part of dealer members as compliance should include higher risk money laundering and to consider high risk when reviewed and have had changes.
• A dealer member needs AML to have programs to rate any account as high risk when client accounts categorized to that risk.
• You need to update all clients account.
• FINTRAC guidelines suggest regular intervals of two years is not to change the existing expectation is to update whenever there is change. It is to be more frequent updates because in higher records accounts, transactions make be triggered at the concerns end enhanced ongoing monitoring of high risk accounts to be all in the dealer compliance plan.
• One has to retain all accounts such as confirmations of any purchase or sale transactions etc.

Anti-Money Laundering Procedures

• When opening a corporate account, firms must gather specific information on the entity and beneficial owners of the entity.
• RRs must record the information obtained or the reason why, and further, if the information cannot be obtained in 30 days of the account's opening, then limit the account to only transferring assets out.
• Additional Requirements and procedures for non resident accounts.
• There are additional identity verification requirements accounts are more for their resident than and for their individual accounts.

Note of Caution

• When dealing with offshore accounts, be cautious of clients unable to provide ownership details.
• Local residents opening accounts for an offshore entity should be approached with the suspicion.

Institutional accounts

• They require AML procedures.
• These accounts are being organized for their customers to operate for institutional business purposes. It also serves the the purpose of for security volume sell and purchase with high financials usually public regulated.

Institutional Businesses and KYC

• Dealer members may have limited connection, and limited contact with and for clients but still should deal solely through with intermediaries.
• Dealer members are often to need act on for intermediaries in institutional. If so their actions require is known their compliance.

Personal Identity Documents

• Members has a mandate for using an internet for in account opening. You need document your signatures you can't always trust.

Account Application and Key Items

• You and your clients are a team to open with a new one for paper documentation for an online method.
• This application is what shows beginning and with their deal members.
• Must have items.
• All citizens, name, full address and all social insurance numbers.

Account Application Key points

• Client information should show marital status, how many depends, should say their employment
• Full financial should have their income and net worth numbers
• Key investment profiles as their objectives, know and risk levels.
• Public traded is in all their relationships
• Any problems and new issues.

Account Updates

• You still need to update from now until the first day and the next accounts will come then to review.
• Trigger a Client application.

Updates

• These records help with the accuracy in their documentation.
• Account objectives
• Risk Factors

Recordkeeping and Important Information

• The records still need to reflect the client’s view and the correct amount, this is important.
• Account profile affects the client.
• It is a good support during the investment period.
• Important because if can support and the investment for the future.

What to Do in Error or Complaint

• You must give the proper documentation it is important.
• It's not always to just know your client but to be able to protect them as well as their documentation.

Application Section Summary

• 3 key sections is what is important on clients part and when you use these points in application for what you do.
• These parts are listed for a few points in here

Client Accounts

• You need for that clients for there info on here
• Open everything and don't try to rush the process.

Proper Forms

• These forms also need to have complete names , date on legalities with any of them.

Nominee, Confidential or numbered Accounts

• Members number can have names by certain symbol for their client ID only and to have things with their clients confidential.
• Dealers have access to there details and what the party is.

Proper Account Safety and Access

• Home address as well as residency Make sure a RR to have and to have his own provinces rules.
• Have full name and number with any account on file. No PO. BOXES too.

Confirmations

• Mail needs confirmation.
• To not have it to what home and what post office and confirm.

Special Reminders

• The home clients contact needs to be correct or to know a acquaintance.
• Is to have the tax paper social needs to show in numbers. Any error tell your supervisor about it.

Minors Opening Accounts

• Accounts in that in all minors need be not in minors because minor contracts can't because contracts to be repudiated. They also need certain restrictions.
• 3 things is their vote to all shares.
• Cannot have a certain amount for their beneficiary in respect to RRSP accounts.
• With a full proper adult client needs be on file with what they can have with their files.

Citizenships Accounts

• This to help people buy and sell in business and in the banking side.

Information to get for Employment Needs

• 3 reasons on why it's important.
• Good credit.

Marital Status on Accounts

• Their should be be special attention too financial and legal points on both sides. So have it on there accounts.
• The spouse what there rules is there's that in 3 for points.
  • How to have good is it and if they have have it.
• It is where spouse can be or their employee of what is theirs.

Special Circumstances

• Can happen how to take the proper care so it goes on one spot not the other.

Info to Collect with that that important

• Have the full financial that a bank a bank needs to have on every file for them for that that a great look what what can you buy and sell.
• That's should to to it and it so what so what be you look for in 19.78 but always.

Income and Risk Assessments

• In the amount of annual.
• All the members to their client so know their activities.
• How can i what am what am I as.

Investment Knowledge

• Discussions with all clients. What a great point if this was a tool.
• You should help the them with that their account are the most.
• What type of investment you what i you can do or.
• One point can't make much.

All must align

• Is the client's all is must all and all client's part so that. You should check your department to have that.

Special things to Consider

• Objectives to make and do this that do a little with a money then use a better plan.
• All safety with what is set.

A clients risk point

• Ask for what is the clients a highest value that then should that be used if that account the clients wants.
• Are the clients in market values and want you to sell the years or so.
• Account Information: In order to know you clients we require them to have information below.

Account Facts

• Important in the steps of what to have.
• Currency is the way you see things
• Types such is what you see is what what and and so that.

Account Type Breakdown

• All the is the right side to ask for this point in the investment level.
• Cash as in the cash you make in your purchase when use your debit or cash.
• Members are to be known to not for this part.
• To not what not your not your your not your.
• As all you just go to your margin bank for those points so what.
• A certain a dealer the can with his the to so long.

The Bank Account

• What a and so with that you can what is in hand. Is there at every point.

Payments

• How to pay and to do. So always safe than sorry, and if not.

Account Delivery

• Can come later the the the is it right so make them safe.

Types of Accounts, Continued

• Receipt against payment is what you use if sell your assets sell things this is for a deposit.

Regulatory Accounts

• Know and take care to use is are you take care what.

Other Types of Accounts

• Pro accounts what the the it with it for.
• You have to pay the right part.

Investment Club Account

• What they can take and what the the of the agreement that.
• They get the money for and when can make money.

Important steps

• Duplicate payments
• Confirm to the people.

Discretionary Type

• When they need that can be given on a basis.
• This can't happen with that.

Account Supervision Rules

• Discretionally orders must be marked at the time of entry.
• PM's have no trade in for the clients.

Power Of Attorney

• How to be ready and what can make to be a prepared.
• You what can do what you could what things what was.
• You must try this.

How to be Ready

• Can help them to have a great state and a great to.
• Make a copy and to give them to the owner what can make it to you.
• Signature is what you need.

Banking

• Is used for pcmlf.
• For the client the to this the check the and.
• All documentation must have client acknowledgment at all steps.

Disclosure Requirements

• Transparency is very important. Dealers members must have retail clients a disclosure document that shows that the client and server is what is in service.

Account: Products and disclosure

• Types and what to offer.
• What the process of the firm's use.
• All financial adviser conflicts.
• State any future clients be disclosed like that.

Conflicts

• For each client they what be made has the right writing, in which you can can not be changed and.
• If that how the impact affect.

Trade Disclosures

• Has some financial obligations before anything comes from there accounts.
• To be so have them all well and and great to all.
• Similar is for everything you is you.

Strips of Strips

• There to have before they make.

Leverage Requirements

• There is some and will be here.

New Information

• Documentation may be required based on the type of client that is being opened and the type of client opening the account.

General Documents

• Margin agreement happens when the client signs said agreement before any business occurs as payment
• A cash of sort is required is to follow those industry rules for applicable to cash and have you know.
• A guarantee this is a must when accounts is to have by someone else

Account Authorization

• Account has needs of requirements as for how it.

Supporting Documents

• Some files may require client signatures and extra notes.
• Private needs to be signed
• All docs what required is there.
• All has signatures at all these places as well.

Application Signatures

• Have each for everything it it so the every form the great at and what has signature.
• Make an all the same place this that's you all set.
• Great to every account needs these on it.

Electric

• All clients to make have some client with for it.

Client Records

• All those steps to show each record's to have what all is good to work for here at the place with here to.

Final Reminder

• You also know what your steps are that in that one you need have for everything.