Client Onboarding, KYC/AML and Account Administration
This domain tests how a brokerage establishes and maintains the client relationship within FICA, FAIS and JSE requirements. The exam focuses on risk-based customer due diligence, beneficial ownership, sanctions and ongoing account maintenance.
Core rules and concepts
- Identify and verify the client before establishing a business relationship, using reliable, independent documents or electronic verification.
- For legal entities, identify the entity, its authorised representatives and beneficial owners, generally those holding 25% or more, and understand the ownership and control structure.
- Apply enhanced due diligence to higher-risk clients, including politically exposed persons, complex structures and higher-risk jurisdictions.
- Screen against sanctions and relevant watchlists at onboarding and on an ongoing basis.
- Risk-rate the client and apply ongoing monitoring, periodic review and event-driven review.
- Retain identification and transaction records for at least five years after the relationship ends or the transaction is completed, as applicable under FICA.
Worked example
A new corporate client is owned 60% by a South African company and 40% by a trust in a higher-risk jurisdiction. The correct reasoning is that the corporate client is not the only party to identify. The broker must verify the company, its directors and authorised signatories, and look through the trust to its beneficial owners and controllers. The higher-risk jurisdiction and trust structure may require enhanced due diligence and senior management approval. Opening the account before resolving the ownership chain is a control failure.
Traps that cost marks
- Treating a company as sufficiently identified without looking through to beneficial owners.
- Applying standard due diligence to a PEP or complex offshore structure.
- Screening only at onboarding and never again.
- Confusing FAIS advice records with FICA identification records.
Exam focus
Ownership look-through, PEP treatment, record retention and periodic review are common scenarios.