banner banner

Does every financial transaction trigger the verification requirement?

No. There are several exceptions included in the rule. You do not have to verify the identity of the client (nor obtain and record information about the source of funds for the financial transaction) if:

  • the client is a financial institution, public body or reporting issuer;
  • the funds are transferred using an “electronic funds transfer” as defined in the rules; or
  • the funds involved are:
    • paid by or to a financial institution, public body or reporting issuer;
    • received by a lawyer from the trust account of another lawyer;
    • received from a peace officer, law enforcement agency or other public official acting in an official capacity;
    • paid or received to pay a fine or penalty or bail; or
    • paid or received for professional fees, disbursements or expenses.

When a client’s matter involves more than one financial transaction and there is an exemption from the verification and source of funds obligations with respect to one of the transactions, the other transactions will be subject to the obligations unless there are exemptions that apply to them.

Note that the former exemption from verification of identity in situations where funds are paid or received pursuant to a court order or settlement of any legal or administrative proceeding no longer applies.