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The REGTECH Book
book

The REGTECH Book

by Janos Barberis, Douglas W. Arner, Ross P. Buckley
August 2019
Intermediate to advanced content levelIntermediate to advanced
392 pages
14h 11m
English
Wiley
Content preview from The REGTECH Book

Can We Digitize Know Your Client?

By Shawn Brayman

CEO, PlanPlus Global Inc

Before we answer the question of whether we can digitize the know your customer (KYC) process, we need to look at how it is done today.

As part of an extensive research project on behalf of the Ontario Securities Commission in Canada, Current Practices for Risk Profiling in Canada and Review of Global Best Practices,1 major regulators in the United States, Canada, the United Kingdom, Australia, and several other countries were interviewed. Every regulator in each marketplace was consistent:

  • Robots must know your client to the same extent as a human adviser.
  • No regulator prescribes what an adviser (or robot) must do to know the client.
  • All regulators reference professional judgement as the foundation of knowing the client – educated, licensed professionals who are trained to know what to ask, when to ask it, and how to arrive at an assessment of a risk profile.
  • A questionnaire is unlikely to be sufficient on its own, as they usually support only limited discovery and cannot adapt to unknown complexity in a consumer’s situation. Advisers must dig deeper to determine whether other factors might be relevant.

Regulators worldwide are moving to higher standards of investor care, Trump and Department of Labor (DOL) issues notwithstanding. ‘Investment suitability’ is no longer sufficient – recommendations have to be in the client’s best interests. With new fiduciary standards, advisers and firms are required ...

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Publisher Resources

ISBN: 9781119362142Purchase book