Ch. 15 Compliance Flashcards
What items are acceptable as proof of identity under the Customer Identification Program (CIP)?
Passport or driver’s license (both have a picture)
If a client refuses to provide certain information, may the account still be opened?
Yes, although name and address are required.
Describe the term structuring as it relates to money laundering.
When a customer deposits or transfers assets below the reporting thresholds in an attempt to avoid detection
What protects a brokerage client from theft or embezzlement?
The posting of a fidelity bond by the BD
True or False: Using a P.O. Box as an address is not acceptable to open an account.
True. An actual address is required; however, mail may be sent to a P.O. Box.
Under the TCPA, how is an established customer defined?
One that has made an unsolicited inquiry or effected a transaction with the firm
Under Regulation SP, a _________ is someone who has an ongoing relationship with a firm.
Customer
True or False: There are no suitability requirements for institutional investors.
False. Although they differ from retail requirements, suitability requirements do apply to institutional investors.
What would a customer find on her account statement?
The current value of all securities, number of shares, and all dividends and interest received
Define correspondence.
Material that a member firm makes available to 25 or fewer retail investors within any 30-calendar-day period.
In the process of opening a new account, when must an RR obtain customer information?
Prior to entering the first order
How often must anti-money laundering (AML) programs be tested?
Annually, by an independent source
What are the different methods a firm may use to provide disclosure regarding its business continuity plan?
A disclosure statement is provided at account opening, posted on its Website, or mailed to clients upon request.
Based on written instructions, a B/D may hold customer correspondence for _____ months.
3 months
True or False: Trade confirmations may be sent electronically.
True
Identify the acronym: AML
Anti-money laundering
In what different forms may retail communications be delivered?
Written or electronic
Give examples of information included on a customer statement.
Name of securities (issuer), number of shares owned, price or market value of securities, and dividends or interest paid
List three reasons that would warrant updating a customer account form
Changes to the customer’s name, address, or occupation
Under Regulation SP, a _________ is someone who gives nonpublic, personal information to a BD that may result in trades.
Consumer
True or False: Reviewing account statements allows clients to identify problems or deficiencies in their accounts.
True
True or False: FINRA’s suitability rules for institutions are less stringent when compared to the rules for retail investors.
True
True or False: An RR may send a confirmation for a trade he believes will occur soon.
False. Trade confirmations may only reflect actual transactions.
Regulation S-P requires clients be provided with a ______________ detailing how BDs handle personal client information.
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