Customer Identification and Documentation

Question 1

What does CIP stand for in the context of financial regulations?

Answer 1

Customer Identification Program

Question 2

List the four key pieces of information required for customer identification under CIP.

Answer 2

• Name
• Date of birth
• Address
• Identification number

Question 3

Fill in the blanks:

The ______ ______ ______ requires financial institutions to implement a Customer Identification Program.

Answer 3

USA PATRIOT Act

Question 4

What is the primary purpose of Know Your Customer (KYC) requirements?

Answer 4

To verify the identity of clients and assess potential risks of illegal intentions.

Question 5

Name two key differences between CIP and KYC.

Answer 5

• CIP focuses on verifying identity at account opening.
• KYC includes ongoing monitoring of customer activities.

Question 6

Fill in the blank:

Financial institutions must retain customer identification records for at least ______ years after the account is closed.

Answer 6

five

Question 7

What type of document is typically used to verify a customer’s identity under CIP?

Answer 7

Government-issued ID

Question 8

What is one of the main objectives of implementing CIP and KYC requirements?

Answer 8

To prevent money laundering and terrorist financing.

Question 9

What is the primary purpose of Regulation S-P?

Answer 9

Protecting the privacy of consumer financial information.

Question 10

Which document must be provided to customers under Regulation S-P?

Answer 10

Privacy notice

Question 11

Fill in the blanks:

Under Regulation S-P, customers must receive a privacy notice at the time of ______ ______.

Answer 11

account opening

Question 12

List two key components that must be included in a privacy notice under Regulation S-P.

Answer 12

• Information collected
• Information sharing practices

Question 13

What option must be provided to customers regarding their information under Regulation S-P?

Answer 13

Opt-out option

Question 14

Fill in the blank:

Regulation S-P applies to all ______ institutions.

Answer 14

financial

Question 15

What is the primary purpose of a Power of Attorney (POA) in securities accounts?

Answer 15

To authorize someone else to make decisions on behalf of the account holder.

Question 16

Fill in the blank:

A ______ Power of Attorney remains in effect even if the account holder becomes incapacitated.

Answer 16

durable

Question 17

List the types of account authorizations that can be used in brokerage accounts.

Answer 17

• Limited Trading Authorization
• Full Trading Authorization
• Discretionary Authority

Question 18

What is required for a POA to be valid in a brokerage account?

Answer 18

Written documentation and proper identification.

Question 19

True or False:

A Power of Attorney automatically expires upon the death of the account holder.

Answer 19

True

Question 20

Fill in the blank:

To execute trades on behalf of a client, a registered representative needs ______ authorization.

Answer 20

discretionary