Client Identification & Verification
CLIENT IDENTIFICATION AND VERIFICATION AND MONEY LAUNDERING
Money laundering and terrorist financing are on the rise in Canada. On behalf of all law societies, the Federation of Law Societies of Canada has generated model rules for client identification and verification, to ensure that legal professionals in Canada are not facilitating money laundering and terrorist financing.
The most recent version of those rules were adopted by the Law Society of the Northwest Territories and came into effect January 1, 2020. This includes new rules around cash transactions, as well as more detailed rules for client verification.
Members should be familiar with Rules 95 through 135, which contain these provisions.
The Law Society circulated a memo to members about these new Rules, you can find it here.
The Law Society also provided members with a document explaining in more detail how to satisfy the “dual process” client verification requirement. You can access that here.
The Federation has produced a useful document, Guidance for the Legal Profession – Your Professional responsibility to Avoid Facilitating or Participating in Money Laundering and Terrorist Financing.
The Federation has also provided Risk Assessment Case Studies for the Legal Profession. This helpful booklet includes a list of “red flags” that all lawyers should be aware of to avoid being caught in a possible money laundering transaction.
GUIDANCE ON USING AN AGENT
Please see this document from the Federation of Law Societies of Canada Anti-Money Laundering Working Group providing guidance on using an agent for client identification and verification.
GUIDANCE ON MONITORING OBLIGATIONS
The Client Identification and Verification rule requires legal professionals who are retained in respect of a financial transaction to periodically monitor their professional business relationship with their client. This requirement applies to all clients in such circumstances, including long-standing clients. Please see this document from the Federation of Law Societies of Canada Anti-Money Laundering Working Group providing guidance on monitoring obligations.