What is the purpose of Know Your Client (KYC) procedures in FAIS?

• A. To verify identity, assess risk, and ensure compliance and suitability
• B. To determine the client’s preferred brand of banking
• C. To assess the client’s social media influence
• D. To calculate the client’s potential investment return

Answer: (A)

Know Your Client procedures in FAIS are about establishing who the client is, understanding their financial situation and objectives, and ensuring that the advice given fits their risk tolerance and needs while meeting regulatory obligations. Verifying identity and sources of funds helps prevent fraud and supports anti-money laundering controls. Assessing risk involves identifying the client’s risk tolerance, investment horizon, liquidity needs, and financial constraints so that recommendations align with their profile. Ongoing monitoring and proper documentation underpin compliance with FAIS codes, disclosure requirements, and the suitability standard, helping to ensure that products and strategies are appropriate for the client over time.

The other options miss the core purpose: they focus on brand preference, social media influence, or expected returns, none of which relate to verifying who the client is, assessing their risk, and making sure the advice and products are suitable and compliant.