NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Operational Aspects of Investment Management
An investment adviser manages client onboarding. Which of the following is the primary purpose of the Know Your Customer (KYC) process in the securities market?
KYC exists to verify a client's identity and address, which supports anti-money laundering compliance and reliable client records. It has nothing to do with guaranteeing returns, deciding the tax slab or setting brokerage rates.
- ATo guarantee returns on the client's investments
- BTo verify the client's identity and address and prevent money launderingCorrect
- CTo determine the client's tax slab for capital gains
- DTo fix the brokerage rate the client will pay
Explanation
KYC verifies identity, address and other details of the client, supporting anti-money laundering requirements. It does not guarantee returns, set tax slabs, or fix brokerage.
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