The popularity of FX-trading via Internet platforms has serious implications for the applicability of traditional rules such as "Know Your Customer". Which of the following are correct?
A) "Know Your Customer" rules cannot be applied online and banks will have to rely instead on new safeguards such as third-party authentication.
B) "Know Your Customer" rules apply only to retail customers and are therefore irrelevant to currency trading.
C) In practice, banks can avoid "Know Your Customer" rules by limiting online deal size to EUR 100,000.00 or equivalent.
D) No trading should be carried out without first identifying and setting up the counterparty; this includes "Know Your Customer" procedures.

Question

Quizplus · Accepted Answer

"Know Your Customer" rules apply to all customers, including those trading currencies online. Banks must identify and verify the identity of their customers and carry out due diligence to detect any potential risks. This includes setting up the counterparty and applying "Know Your Customer" procedures before any trading is carried out. Limiting online deal size or relying on third-party authentication alone is not sufficient to meet regulatory requirements.

The Popularity of FX-Trading Via Internet Platforms Has Serious Implications