Series 7: 14.1.2. Know Your Customer Rule

Taken from our Series 7 Online Guide

14.1.2. Know Your Customer Rule

The Know Your Customer rule (FINRA Rule 2090) requires broker-dealers to use “reasonable diligence” to collect and maintain essential information on their customers when they open accounts. The rule requires that firms check their customers’ identities, investment histories, investment objectives, and sources of funds. This information provides the broker-dealer with some assurance that its customers are not laundering money and assists the broker-dealer in making suitable recommendations for the customers’ accounts.

If a customer does not provide all the information required on a new account form, the account may still be opened, as long as the firm collec

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