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If a person has a durable power of attorney that becomes active in the event the Principal becomes disabled, is an investment company for the Principal required to obtain personal financial information, (such as income and net worth) from the Attorney-in-Fact prior to accepting the document and granting access to the account information of the Principal?

Presume that other required documents such as letters attesting to the disability are provided along with the POA.

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One set of disclosures would be those necessary to comply with anti-money laundering, counter-terrorism financing regulations, and international sanctions laws (e.g. related to the Ukraine war). Involvement as an agent who is subject to these restrictions would still be something that the firm needs to rule out.

Another might be compliance with "know your customer" laws which are a bit tricky because the POA agent is only the "customer" in a partial and limited sense. On one hand, the law wants to avoid exploitation of a vulnerable POA agent to the detriment of the principal by knowing the agent's level of financial sophistication, risk tolerance, and investment goals. On the other hand, ultimately it is the principal's finances that are at stake.

The disclosures described in the question seem to be questions related to accredited investor status, and it isn't clear that the POA agent needs to financially meet the requirements for accredited investor status.

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    "Know your customer" laws was the answer they provided when I asked, thanks! Mar 22, 2023 at 2:13
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It's hard to prove non-existence, but there is no evidence of there being a legal requirement on the Agent to provide personal financial information to a third party. Taking RCW 11.125.200 as a starting point,

(1) Except as otherwise provided in subsection (2) of this section: (a) A person shall either accept an acknowledged power of attorney or request a certification or a translation no later than seven business days after presentation of the power of attorney for acceptance... (c) A person may not require an additional or different form of power of attorney for authority granted in the power of attorney presented.

"Shall" means that they must accept it, end of discussion. Subsection (2) say when they don't have to accept the form:

(2) A person is not required to accept an acknowledged power of attorney if: (a) The person is not otherwise required to engage in a transaction with the principal in the same circumstances; (b) Engaging in a transaction with the agent or the principal in the same circumstances would be inconsistent with federal law; (c) The person has actual knowledge of the termination of the agent's authority or of the power of attorney before exercise of the power; (d) A request for a certification or a translation is refused; (e) The person in good faith believes that the power is not valid or that the agent does not have the authority to perform the act requested, whether or not a certification or a translation has been requested or provided; or (f) The person makes, or has actual knowledge that another person has made, a report to the department of social and health services stating a good faith belief that the principal may be subject to physical or financial abuse, neglect, exploitation, or abandonment by the agent or a person acting for or with the agent.

none of which arises in the situation you describe. This law (the Uniform Power of Attorney Act) exists in most states. New Jersey law has somewhat different conditions on acceptance, that

Any third party may rely upon the authority granted in a durable power of attorney until the third party has received actual notice of the revocation of the power of attorney, the termination or suspension of the authority of the attorney-in-fact, or the death of the principal

but there is no clause saying "only if the agent provides personal financial information".

It may be necessary to get a court order to force a party to accept a valid POA, especially if the state hasn't enacted the Uniform Power of Attorney Act.

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  • To be clear, there are basically never formal legal requirements for KYC, beyond "the bank has to have a policy, and the regulators have to like it." Everything else gets ironed out behind the scenes so that money launderers etc. don't know where the weak points in the system are.
    – Kevin
    Mar 22, 2023 at 19:31

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