Introduction

Welcome to Customer Screening and Documentation: the rules that tell a Series 6 representative who a new customer actually is, how to verify it, how to protect what you learn, and who else is allowed to touch the account.

Exam Weight: Part of 16% (8 questions across Chapter 2)

What You'll Learn

In this unit, you'll cover:

• Customer Identification Program (CIP): The four pieces of identifying information required under the USA PATRIOT Act, documentary and non-documentary verification, the OFAC list check, and the 5-year record retention rule
• Know Your Customer (FINRA Rule 2090): The "essential facts" standard and why KYC applies even without a recommendation
• Screening for Special Status: Domestic vs. foreign citizenship, corporate insiders under Rule 144, and employees of broker-dealers under FINRA Rule 3210
• Regulation S-P: The initial privacy notice, annual notice, opt-out notice, exceptions to opt-out, the Safeguards Rule, and the Disposal Rule
• Power of Attorney (POA): Full vs. limited POA, durable vs. non-durable, and why death of the principal revokes every POA
• Trusts, Corporations, and Entity Accounts: What documentation the firm needs for trusts, corporations (including margin and options authorization), partnerships, and unincorporated associations
• Discretionary Accounts (FINRA Rule 3260): The three elements that trigger discretion, the time and price exception, the written authorization requirement, and the principal's duty to approve every discretionary order
• Suspicious Activity Reports (SARs): Escalation to the AML officer and the prohibition on "tipping off" the customer

Why This Matters

The Series 6 exam tests whether you can tell:

• CIP vs. KYC: verifying a driver's license at account opening (CIP) vs. understanding who has authority throughout the relationship (KYC)
• Limited trading POA scope: a limited trading POA does not let an outside manager wire funds out
• Non-durable POA + incapacity: a non-durable POA does not survive the customer's incapacity
• Durable POA + death: death of the customer does revoke a durable POA (durability ends at death)
• SAR confidentiality: a rep may not tell a customer that a SAR was filed (tipping off is prohibited)

Every fact protects the customer, the firm, and your registration.

Let's start with identifying the customer, beginning with CIP and KYC.