Answer: As set out in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (31-103), as a registrant you are now required to follow all the new KYC and suitability requirements. Section 13.3(2) of NI 31-103 provides, among other things, that a registrant must take reasonable steps to ensure it has sufficient information about its clients regarding certain factors to enable it to meet its suitability determination, including the client’s personal and financial circumstances, and the client’s investment needs, objectives, investment knowledge, risk profile and investment time horizon. In addition, Section 13.2(4) of NI 31-103 specifically provides that you must “take reasonable steps” to keep the KYC information current, including updating the information within a reasonable time after becoming aware of a significant change in the client’s information that you have in your files.
As noted in the CSA’s FAQs on the Client Focused Reforms, CSA staff have stated that they expect registrants to schedule KYC updates in accordance with the triggers set out in Section 13.2 (4.1). CSA staff specifically note that as a registrant, you must use your professional judgement, when interacting with clients, to determine if you need to ask about any significant changes to the client’s circumstances and then update the KYC information accordingly. With respect to how often you need to reach out to clients (assuming they do not reach out to you to let you know of a significant change), the expectation is that you will periodically confirm with clients that the information you have is current. One suggestion provided is that you consider having more frequent interactions at set intervals; again, all depending on your relationships and mandate with your clients. In all cases, your policies and procedures must demonstrate that you have taken reasonable steps to keep KYC information up to date. Your firm must also provide training to all registered individuals on compliance with securities legislation, including the KYC obligations.
March 31, 2022