WHEN OPENING A NEW ACCOUNT FOR A CUSTOMER, FIRST OBTAIN IMPORTANT INFORMATION ABOUT THAT CUSTOMER

Okay, so you are becoming licensed as a securities representative. Before you may open a new account, you must first obtain important information about that customer. This gathering of information is required by the U.S. Patriot Act to prevent criminal money laundering and/or tax avoidance. In accord with the Patriot Act, the U.S. Treasury and the SEC have established a Customer Identification Program (CIP) that controls brokers when opening new accounts.

FINRA's Content Outline for the Securities Industry Essentials (SIE) Exam includes customer screening and Customer Identification Program in the Rules following Section 3.3.3. Consequently, SIE candidates should expect to see questions on these topics on the test and should prepare for them.

Bob Eder covers these rules in detail in his Study for the Securities Industry Essentials (SIE) Exam. Here is a sample of Bob Eder's treatment:

"Non-Documentary Verification

"A broker/dealer, such as Ajax, may use non-documentary means [for verifying customer information] when it has a large number of accounts opened over the internet, telephone, and mail. Lonnie, Ajax's principal, likes to utilize non-documentary means. He finds them especially appropriate when reps of Ajax are not able to examine original documents, or unable to meet the customer in person. Some of the approved tools that Lonnie uses include . . . "

Here is the link to FINRA's Content Outline for the SIE Exam. See the references to Customer Identification Program in FINRA's Content Outline, in the Rules section specifically on the U.S. Patriot Act, following Outline 3.3.3.

Study for the Securities Industry Essentials (SIE) Exam is available from Amazon in both paperback and Kindle e-book versions. Here is the link to Bob Eder's book on Amazon.

For questions about Bob Eder's Study for the Securities Industry Essentials (SIE) Exam, or questions in general about the SIE exam, or about the Customer Identification Program (CIP), feel free to email Bob Eder at bobeder@bobeder.net.

Bob Eder received his Juris Doctor (J.D.) degree from the University of Utah, Quinney College of Law, in 2001. See Bob Eder's Author Page on Amazon.com.

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