Series 7 Quiz: Apply Customer Identification Rules

What this quiz covers

This quiz focuses on Apply Customer Identification Rules, giving you a quick way to practice the rules, question types, and explanations that matter most for Series 7.

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

Question 1

1. To verify a customer's identity using government-issued documents.
2. To ensure the firm understands the essential facts about a customer to effectively service their account and make suitable recommendations. (correct answer)
3. To provide customers with a method to opt out of sharing their personal information with third parties.
4. To report all currency transactions exceeding $10,000 to the appropriate federal authorities.

Question 2

1. inform the client that the account cannot be opened without this federally required information. (correct answer)
2. open the account but flag it for immediate supervisory review.
3. proceed with the account opening since the client's identity can be reasonably verified with the other information.
4. use a default date of January 1st of an estimated year to complete the paperwork.

Question 3

1. the categories of nonpublic personal information the firm collects.
2. the firm's policies on protecting the confidentiality of information.
3. the names of the specific nonaffiliated companies with which the firm shares information. (correct answer)
4. an explanation of the customer's right to opt out of certain information sharing.

Question 4

1. Maintain records of information used to verify identity
2. Provide customers notice that the firm requests information to verify identity
3. Confirm the customer's preferred asset allocation across product categories (correct answer)
4. Use documentary or non-documentary methods to verify identity

Question 5

1. Name, investment objectives, and a copy of their driver's license.
2. Name, address, date of birth, and Social Security number. (correct answer)
3. Address, annual income, net worth, and tax identification number.
4. Name, employer's address, date of birth, and risk tolerance.

Question 6

1. within 30 days after the account is opened.
2. prior to executing the first transaction for the customer.
3. no later than the time the customer relationship is established. (correct answer)
4. only if the customer specifically requests a copy in writing.

Question 7

1. three years after the account is opened.
2. six years after the account is closed.
3. five years after the last transaction.
4. five years after the account is closed. (correct answer)

Question 8

1. FINRA's Department of Member Regulation.
2. the firm's Chief Financial Officer.
3. the firm's board of directors or an equivalent governing body. (correct answer)
4. the Securities and Exchange Commission.

Question 9

1. the personal tax returns of all principal officers.
2. a certified copy of the entity's articles of incorporation or partnership agreement. (correct answer)
3. a list of all employees authorized to trade in the account.
4. the Social Security numbers of all shareholders owning more than 5% of the company.

Question 10

1. Contacting the customer by telephone to confirm their address.
2. Requiring the customer to mail a notarized copy of their birth certificate.
3. Cross-referencing the customer's information with a credit reporting agency or other public database. (correct answer)
4. Accepting a signed statement from the customer attesting to their identity.

Question 11

1. The customer's foreign driver's license number.
2. The customer's U.S. Social Security number, if they have one.
3. The customer's foreign passport number and country of issuance.
4. Any of the above would be acceptable. (correct answer)

Question 12

1. notify the SEC and await further instructions before proceeding.
2. open the account but immediately place a restriction on all withdrawals.
3. refuse to open the account, block any associated funds, and report the match to OFAC. (correct answer)
4. request a secondary form of identification from the client to resolve the potential mismatch.

Question 13

1. determining the suitability of investments.
2. verifying a customer's identity. (correct answer)
3. protecting the privacy of customer information.
4. monitoring for suspicious transactions.

Question 14

1. affiliated companies of the broker-dealer.
2. government regulators conducting an examination.
3. nonaffiliated third parties. (correct answer)
4. the broker-dealer's own clearing firm.

Question 15

1. Set the customer's commission schedule based on anticipated trading frequency
2. Identify the customer and verify identity using documentary evidence only
3. Understand customer background and activity to support monitoring and risk controls (correct answer)
4. Deliver privacy notices only when the customer requests an opt-out form

Question 16

1. A firm marketing profile created from public web searches only
2. A credit report from any country as the primary identity verification document
3. A utility bill alone, without any government-issued identification
4. A valid government-issued passport or similar national identification with photograph (correct answer)

Question 17

1. Retain records of information obtained and verification results for required periods
2. Resolve identity discrepancies and consider limiting account activity if needed
3. Verify identity using documents, database checks, or other reliable methods
4. Provide the customer with an initial privacy notice under Regulation S-P (correct answer)

Question 18

1. They must be delivered only after the customer completes a risk questionnaire
2. They must be filed with FINRA before being delivered to any customer
3. They must include the customer's full identification document images for confirmation
4. They must be provided at account opening and describe opt-out rights when applicable (correct answer)

Question 19

1. By sending a request only through a court order served on the firm
2. By requesting opt-out from the clearing firm, regardless of the broker's notice
3. By declining to provide identification documents during CIP verification
4. By choosing a reasonable opt-out method offered in the notice, such as online or mail (correct answer)

Question 20

1. Settle customer trades by ensuring delivery versus payment occurs on settlement date
2. Verify identity solely by comparing signatures on two account forms
3. Replace privacy notices by obtaining a single consent at account opening
4. Identify customer risk factors and expected activity to help detect suspicious behavior (correct answer)