Know Your Client (KYC) is a standard in the investment industry that makes sure advisors can confirm a client’s identity and know how much they know about investing and how much money they have. KYC has three parts: the customer identification program (CIP), which was required by the USA Patriot Act in 2001, customer due diligence (CDD), and ongoing monitoring of a customer’s account, also called enhanced due diligence (EDD).
The Know Your Client (KYC) rule is a code of ethics for people who work in the securities industry and deal with customers when opening accounts and keeping them up to date. It is used at the beginning of the relationship between the customer and the broker to find out the most important personal information about each customer before any financial advice is given. The customer is also told that they must follow all laws, rules, and regulations in the securities industry.