Know Your Client Checklist

Know Your Client training (KYC training) is often required for employees (brokers, financial advisors) working for investment
companies and financial institutions. The next Know Your Client Action Plan can be used trainers and mentors as a supplement
to their guidelines for training employees. It includes the next categories:
 Know Your Client: Basic Information.
 Customer Profiling.
 Know Your Client Policy (KYC Policy).

1. Know Your Client: Basic Information.

 Know Your Client (KYC) is a sample form in the financial investment industry that brokers and investment advisors
use to understand their customers’ financial needs and circumstances before providing investment advice.
 Using Know Your Client forms (KYC forms) aims to protect both investment advisors and customers. Investment
advisors are protected by Know Your Client documents because they know when they can and cannot make
investments in portfolios of their clients. Customers are protected because their brokers know well what investments
best suit specific situations.
 Know Your Client procedures (KYC procedures) refer to a series of activities for creating profiles for clients.
Profiling helps identify new markets, measure performance, and target potential customers.
 Although Know Your Client documents are traditionally used in the financial investment industry, today you can
find various organizations that prefer using KYC rules. Sales and marketing teams often use Know Your Client
analysis as an efficient method for researching markets, investigating custom expectations and determining target
audience.

2. Customer Profiling.
 Making profiles for customers will help you understand "who" your customers are and develop marketing strategies
that are better tailored to suit customer needs, increase probability of success and improve product sales. Below we
give several steps for creating a client profile. Often Know Your Client questionnaires (KYC questionnaires) are
used for customer profiling.
 Gender: Is your client male of female?
 Marital Status: Is your client married/single? How many children does the client have?
 Family Description: Does your client have a young or older family?
 Age: How old is your customer?
 Income: What is your client’s household income like? How much money does each member of the client’s family
earn?
 Education: Is your customer educated? What type of education?
 Characteristics: What makes your client differ from other people? What can you say about the client’s habits and
predilection? What are the client’s best skills and abilities?
 Strengths and Weaknesses: What are the strengths and weaknesses of your client? What are the advantages and
disadvantages of the client’s temper?

3. Know Your Client Policy (KYC Policy).

 Definition. KYC policy is a documented set of rules and requirements for managing KYC process. The policy
includes 4 key elements which are described below in this checklist.
 Element 1. Necessary Documents. There are several documents required for stating such a policy. Let’s list these
documents:
o Client’s Photo.
o Photo ID Proof (passport, driving license, PAN card etc.).
o Age Proof (driving license, PAN card etc.).
o Residence Proof (passport, bank passbook, driving license etc.).
o Income Proof (Income tax returns, salary slip etc.).
 Note that the documents are based on the information gathered during the previous step.
 Note that the documents include confidential information about clients so such documents are traditionally needed
for brokers and investment advisors while marketing teams will not use the documents.
 After the documents are gathered, you need to make a scanned copy of each document. All the scans are usually kept
in one database file (Know Your Client base).
 Element 2. Account Opening. A decision on opening a new account for a client is based on investigating the listed
documents and analyzing the client’s profile. The analysis results in 1) verification of the client’s account or 2)
refusal to account opening.
 Element 3. Risk Management. Good risk management practices are essential for ensuring that clients with verified
accounts meet Know Your Client requirements (KYC requirements) stated by the policy. Risk analysts involved in
risk planning usually use Know Your Client software to monitor risk status and respond to threats.
 Element 4. Customer Due Diligence. This element of the policy involves creating reports for monitoring investment
activities and identifying how customers discharge their obligations. Brokers and financial advisors need to monitor
Know Your Client status (KYC status) that reflects due diligence level per customer.