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CFA Level I · CFA Level I Exam · Guidance for Standard III: Duties to Clients

An analyst, Wei Tan, works in a jurisdiction where law prohibits disclosing client information, even when it concerns the client's illegal activities. Tan discovers that a client has committed tax evasion. Under the Code and Standards, Tan most likely should:

Tan should maintain confidentiality, comply with the law, and consult compliance or legal counsel if in doubt. Standard I(A) requires compliance with applicable law, and where law requires confidentiality even for client illegal activity, the member must not disclose. Closing the account does not release the duty.

  1. Areport the evasion to authorities, because Standard III(E) overrides local confidentiality law in cases of illegal activity
  2. Bmaintain confidentiality, comply with the law, and consult compliance or legal counsel when in doubtCorrect
  3. Creport the evasion only if the client's account is closed first, because the duty then lapses

Explanation

Standard I(A) requires compliance with applicable law. If law requires confidentiality even for client illegal activities, the member must comply and not disclose. When in doubt, consult compliance personnel or legal counsel. Closing the account does not end the duty, and Standard III(E) does not override the law.

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