Client Identification and Verification
The Law Society takes this opportunity to highlight Law Society Rule 16: Client Identification and Verification Requirements.
Client identification and verification are important because they are tools used to combat money laundering and the financing of terrorist activities. Money laundering and the financing of terrorist activities are serious concerns in modern society. The effects of these illicit activities are vast. They can alter the market value of property and affect a legitimate business’s ability to compete in the marketplace. When large sums of money are poured into the economy through money laundering, currency exchange and interest rates can also be affected. Lawyers may facilitate these financial transactions in different ways, e.g. real estate files, creating companies and trusts. As a result, lawyers are considered to be gatekeepers and have a substantial responsibility to ensure that none of their transactions involve either money laundering or terrorist activities.
Identification refers to the basic information members must obtain from a client whenever they are retained to provide legal services. The requirement is in keeping with the lawyer’s obligation to know the client, understand their financial dealings in relation to the retainer, and manage any risks arising from the professional business relationship with the client.
Verification refers to the information members must obtain to confirm that the client is who they say they are. Verification is required when a member is engaged in or gives instructions in respect of the receipt, payment or transfer of funds.
While members may obtain and retain a copy of a government-issued photo identification for verification of a client, this is not required for client identification. Members should familiarize themselves with applicable privacy legislation, should they intend to obtain information not required by the Law Society Rules.
Relevant practice resources can be found on the Law Society’s website. If you have additional questions, or wish to discuss a specific situation, please contact the Director of Practice Management.