Knowledge Base
Know your client (KYC)
Which KYC pillar specifically concerns regular income and overall wealth?
According to Article 54 of Delegated Regulation 2017/565, the second KYC pillar covers the financial situation, which includes regular income and overall wealth (assets and liabilities).
Which document must be provided to the client before any transaction according to Article 54.9?
The suitability report must be provided on a durable medium before the transaction. It explains why the recommendation is suited to the client's specific situation.
Which AMF position-recommendation incorporates the ESMA guidelines on suitability requirements?
AMF position-recommendation DOC-2019-03 incorporates the twelve ESMA guidelines on suitability requirements for investment services.
What percentage of the sample audited by the AMF in 2020 showed a non-compliant assessment of the ability to bear losses?
The AMF's 2020 SPOT reviews reveal that 87.5% of the audited sample showed a non-compliant assessment of the ability to bear losses.
Risk tolerance and the ability to bear losses are identical concepts.
Article 54.9 of the delegated regulation requires a clear distinction between risk tolerance (psychological dimension) and the ability to bear losses (financial dimension).
Categorize items by dragging them to the appropriate zones
Items to categorize:
Costs
Complexity
Suitability
Article 54.9 requires comparing the costs and complexity of financial instruments. Suitability concerns the correspondence with the client's objectives.
Four KYC pillars
Click to see answer
The four pillars are: knowledge and experience, financial situation, investment objectives, and sustainability preferences (added by Delegated Regulation 2021/1253).