Does the “Know Your Customer” (KYC) Rule Apply to the Enforcement of Fiduciary Duty?

KYC rules require financial institutions to verify the identity of their clients. While KYC itself is primarily for anti-money laundering (AML) and counter-terrorist financing (CTF), it indirectly supports the enforcement of fiduciary duty.

By identifying the client, the intermediary can establish the relationship where the duty applies. More importantly, if front-running occurs, KYC helps regulators identify the affected client and the guilty party for legal action.