Don’t be surprised if your lawyer asks to see your ID card!
To comply with federal laws aimed at combating money laundering and terrorist financing, Canadian law societies have adopted new rules on Client Identification and Verification. The rules are mandatory and apply to all lawyers in Canada. The new rules (also known as Know Your Client rules) became effective on December 31, 2008 in Alberta, British Columbia and Ontario, and on July 8, 2010 in Quebec. Heenan Blaikie has decided to implement the new rules across all of its offices in all four provinces as of January 1, 2009. All the firm’s lawyers in Canada now abide by the Client Identification Rules when they are retained by a new client or an existing client on a new matter or when they receive, pay or transfer funds on behalf of a client or give instructions for such activities on behalf of a client.
Client Identification
When a lawyer is contacted by a new client or an existing client in a new matter, the lawyer must obtain the following information from the client:
- If the client is an individual, the full name, business address, business telephone, home address, home telephone and occupation.
- If the client is an organization (such as a corporation, partnership, trust, co-operative or unincorporated association), the full name, business address, business telephone, incorporation or business identification number and place of issue, and a general description of the business or activities; in addition, the name, position and contact information for the individuals authorized to give instructions on the matter.
- A lawyer is also required to collect the same information about a third party that the client represents.
Client Verification
When a lawyer is receiving, paying or transferring funds (including cash, currency, securities, negotiable instruments and other financial instruments) on behalf of a client or gives instructions for such activities on behalf of a client, the lawyer must obtain the following documentary information from the client:
- If the client is an individual, a piece of identification, such as a driver’s license or passport.
- If the client is an organization (such as a corporation, partnership, trust, co-operative or an unincorporated association), the name and occupation of each director, the name, address and occupation of each person who owns 25% or more of the organization or of the shares of the organization, plus a document verifying the organization’s existence, such as a certificate of corporate status, a partnership agreement, a trust indenture or a copy of an annual filing. The lawyer must also look at a piece of identification such as a driver’s license or passport for each person authorized to give instructions on the payment or transfer of funds.
The lawyer is also required to collect the same documentary information from a third party that the client represents.
Exemptions regarding the receiving, paying or transferring of funds
The retained lawyer does not have to comply with the client verification requirements:
- If the lawyer is engaged as an agent for another lawyer who has already complied with the client verification requirements;
- If the lawyer is engaged for a client referred to her or him by another lawyer who has already complied with the client verification requirements;
- If the funds are paid to or received from a financial institution, public body, company that is not private, or a subsidiary of a public body or company that is not private where the financial statements of the subsidiary are consolidated with those of the public body or company;
- If the funds are received from the trust account of another lawyer;
- If the funds are paid to or received pursuant to a court order or to pay a fine or penalty;
- If the funds are paid to or received as a settlement in a legal or administrative proceeding;
- If the funds are received from a peace officer, law enforcement agency or other public official;
- If the funds are paid to or received for professional fees, disbursements, expenses or bail;
- If the funds are paid to another lawyer in trust on the direction of the client; or
- If the funds are received, paid or transferred by electronic funds transfer.
Heenan Blaikie thanks its clients in advance for helping to collect the documentary information required under these Know Your Client rules.If you have any questions, please do not hesitate to contact your lawyer at Heenan Blaikie.