Don’t Be a Dupe
Don’t become the dupe of an unscrupulous fraudster or money launderer.
It’s time to take the anti-money laundering rules seriously. Verification of the identity of clients participating in financial transactions is all about fraud and crime prevention. There have been some big claims in Canada arising out of fraud where ‘the client’ was not who they said they were, resulting in significant losses to innocent persons. Strict adherence to the anti-money laundering rules might have prevented those losses.
If your approach to verification got a bit casual during COVID, tighten up. Law Society auditors are checking to confirm compliance.
Before COVID – Verifying photo ID in person only
Before COVID, we met with clients in person, inspected their government-issued photo ID – usually a driver’s license or passport – and copied that ID to verify the client’s identity on financial transactions.
During COVID – Verifying photo ID on Zoom
During the COVID pandemic, meeting with clients in person wasn’t safe. Also, new provincial regulations allowed us to witness certain documents, including land titles forms, remotely by video conference. We only saw client’s government-issued photo ID on the screen, not in person, but because of COVID, the application of the anti-money laundering rules was not strictly enforced.
After COVID – Verifying photo ID in person or using an alternate method
Now that COVID is behind us, holding up photo ID on a video call to verify identity is not safe enough. Going forward, if you are acting on a financial transaction, the identity of your client must be verified using an alternate method, and not by a grainy screenshot.
BUT I WON’T BE MEETING THIS CLIENT IN PERSON!!!!!
In a new world of Teams, Zoom and other video conferencing, you may not be meeting every client in person. However, there are ways to reliably verify the identity of someone you only meet on screen.
Alternative Ways to Verify ID When You Don’t Meet in Person
- You or someone else in your office or the previous lawyer on the file has previously verified the Client’s ID in person.
- An agent verifies ID for you. Send off an Agent Agreement to the client’s real estate agent or banker or accountant or other responsible person who can do the verification for you. (Draft yourself a nice go-to precedent based on this sample agreement.)
- New – Use a DIACC-certified software service that can confirm the authenticity of government photo ID and match the result to the image or video of the client. [Check out the directory of certified software on the DIACC website.] Some title insurers are also offering authentication as an additional service, partnering with certified providers. The service is available whether or not you are also placing a title insurance policy. If your client has an email address, a smartphone and valid photo ID, this is a simple and quick process and costs around $15 to$30.
- The credit check method, seldom used by lawyers, but still an option.
- Use two trusted pieces of information from a reliable source.
Method 5 requires some advance planning because the two trusted pieces of information must be original – not a photocopy or electronic image like a digital photograph, screen capture or scanned copy. It works well for clients who do not have any valid government-issued photo ID but takes time and advance planning.
Examples of reliable source documents include: Canada Pension Plan (CPP) statement, property tax assessment, vehicle registration, Canada Revenue Agency notice of assessment, utility bill (e.g. electricity, water, telecommunications), record of employment, registered investment account statements (e.g. RRSP, TFSA or RRIF), government benefits statement, insurance documents (e.g. home, auto or life), birth certificate, permanent resident card, citizenship certificate, marriage certificate, mortgage statement, bank statement, and credit card statement.
The client can try to email you the document received from the reliable source or to send you a link to the document on the issuer’s website. You may not be able to open those documents because access to them often requires your client’s log in and password, so you will need to plan ahead. You may need to have the information snail mailed to you.
You can still witness documents related to a financial transaction remotely using Zoom, Teams or other video conferencing platforms but you cannot VERIFY the identification of the client remotely by looking at the client’s government issued photo ID on your screen. You will have to take one of these additional steps to verify ID. And don’t forget to ask the source of the funds.
For more information visit the Anti-Money Laundering Resource Library:
