Regulatory Requirements

Financial Institutions are required by U.S. law to collect certain information about customers to comply with various federal regulations:

Know Your Customer (KYC)

Under the USA PATRIOT Act, financial institutions must verify customers’ identities and understand their financial background to prevent money laundering, terrorist financing, and fraud.

Anti-Money Laundering (AML) laws

Financial institutions must detect and report unusual transactions to regulators. Knowing your income and financial situation helps them identify abnormal or potentially illegal activity.

Consumer Protection and Risk Assessment

Risk profiling — Helps institutions determine what is right for you by protection you from unsuitable, illegal, high-risk and expensive financial decisions and - reporting the return on investment to the SEC and FINRA.

For investment accounts income data is needed for IRS reporting and compliance and eetermining eligibility for certain tax-advantaged accounts

Tax and Reporting Purposes

⚠️Privacy Note

Financial institutions are legally required to protect your personal financial information under laws such as the Gramm-Leach-Bliley Act (GLBA). They can’t share your details without your consent except for regulatory or operational reasons.

Which specific regulations apply to your type of account?

  • USA PATRIOT Act (Sections 326 and 352)·

    • This law requires financial institutions to implement a Customer Identification Program (CIP).

  • Bank Secrecy Act (BSA) & Anti-Money Laundering (AML) Rules

    • This law requires financial institutions to implement a Customer Identification Program (CIP).

  • FINRA Rule 2090 (“Know Your Customer” Rule)

    • Financial Institutions must use reasonable diligence to understand:

      • The customer’s financial status

      • Tax status

      • Investment objectives

      • Risk tolerance

  • SEC Regulation Best Interest (Reg BI)

    • Financial Institutions and advisors must act in your best interest, which means they need to know your financial background to give sound advice.

  • SEC Regulation Best Interest (Reg BI)

    • Financial Institutions and advisors must act in your best interest, which means they need to know your financial background to give sound advice.

  • Gramm-Leach-Bliley Act (GLBA)

    • Requires banks to safeguard personal financial data and disclose how it’s used or shared.

  • Right to Financial Privacy Act (RFPA)

    • Restricts government access to your financial records without proper authorization.