Forex glossary
KYC (Know Your Customer)
KYC involves identifying a customer and verifying required information under an institution's obligations, including AML. Scope, documents and timing depend on law and relationship risk. It is distinct from assessing investment knowledge, experience and product appropriateness.
Illustrative example
How does it work in practice?
In a hypothetical CFD account application, the institution verifies your identity and separately asks about your CFD experience. Confirming who you are does not confirm that you understand the product's risks.
A case to work through
Three different roles
Model: a company is the customer; an employee applies, while another natural person ultimately controls it.
- The employee’s details do not replace identifying the customer.
- Check the employee’s authority and required information on company control.
What follows? Identify the roles before gathering documents.
Example boundary: Verification scope depends on local law and relationship risk.
A useful distinction
KYC (Know Your Customer) / AML (Anti-Money Laundering)
AML includes broader monitoring; KYC concerns customer identification and required verification.
Check your understanding
Separate customer, representative and beneficial owner.
Show the answer and explanation
No, these are different roles
Authority to operate an account does not establish ultimate control.
Entity, obligations and client protection
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Read the fuller explanation
Related terms
Sources and documentation
- FATF: customer due diligence recommendations
Recommendation 10: customer, beneficial owner and ongoing monitoring; local law sets specific duties.
Document read: - FCA: copy-trading models
Copying-model distinctions and the relevant scope of UK regulation.
The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.