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KYC: What it means and why it’s important

27 April 2021


For investors, filling out a Know Your Customer, or KYC document is one of the first steps to establishing a relationship with a new financial institution or investment manager. Although KYC is a legal requirement, there are many benefits to investors in filling it out and investors are under no obligation to work with a particular financial institution once they submit their information.

KYC Form - What You Need to Know

Know Your Customer is a standard due diligence process for financial institutions, such as banks, hedge funds, private lenders, wealth managers and investment firms. The process is intended to help businesses identify their customers, verify their sources of income and determine whether there is any risk with taking them on as a client. Beyond that, KYC enables smoother onboarding of clients and can help financial institutions and investment managers provide better services. Although KYC can be seen as cumbersome for investors, the process is extremely beneficial for them as well. For starters, KYC establishes trust between clients and financial institutions, ensuring a secure and seamless experience for both parties.

The KYC process also helps a financial institution understand a client’s investment objectives and risk tolerance, which informs investment recommendations based on suitability. It’s also a way for investors to ensure that the company they are working with is legitimate and will handle their money with care. Financial institutions that don’t implement KYC should be viewed as a red flag for investors as the KYC process also helps businesses ensure that their potential clients adhere to Anti-Money Laundering, or AML, which cover a range of regulatory processes that firms need to have in place.

You can think of KYC as a component of AML that consists of verifying investors’ legal status and identity. During a typical KYC process, investors are asked to submit a range of information including: name, date of birth, address, tax information and proof of income and assets. The actual documents submitted include proof of identity, such as a passport, proof of address, pay stubs and banking information.

As part of the broader AML due diligence process, investors may also be asked to provide more information on their investment experience, risk tolerance and source of wealth. These efforts are to ensure that the source of an investor’s funds is legitimate to prevent money laundering and criminal financing. KYC is not only a requirement for new clients, financial institutions are required to conduct regular KYC updates for existing clients to ensure any material changes are recorded, suitability reassessed and investment recommendations revised accordingly.

Technology has made the KYC process much simpler for investors. A process that used to take days or weeks can be completed in a matter of minutes through the digital onboarding process at major institutions.

CMI Mortgage Investments has made the KYC process quick and seamless for new investors. The onboarding process allows us to get to know more about you and your investment history. Once your documents are submitted and the KYC process is complete, one of our investment managers will follow up with you directly to answer any questions you may have. The KYC process also ensures that we can onboard you as a new investor as soon as you are ready.

KYC Form - What You Need to Know

There has never been a better time to diversify into private mortgages. Since inception, CMI has made over $650 million in successful mortgage placements, making it one of Canada’s fastest-growing mortgage companies.

To get started with CMI and to learn about our KYC process, contact us today.

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