Sometimes, your ‘client’ is not a human being. Instead, you are acting for an organization, a corporation, a trust or another type of entity. If you are acting for an entity on a financial transaction, you still need to verify your client’s identity because fraudsters, criminals and money launderers will use corporations and other entities, made up or real, to dupe you.

That is why when you are acting for an entity, you must verify the identity of that entity. The verification process required depends on the type of entity.

Breaking it Down by Type of Entity

Financial Institution

If your client is a Financial Institution (as defined by Law Society Rule 5-116), including a bank, credit union or trust company, you don’t need to verify the entity’s identity, nor the identity of the instructing human being.

Public Bodies

If your client is a Public Body, which includes a government entity (federal, provincial, territorial or municipal), a hospital authority or an organization incorporated under an Act of Canada or of a province or territory for a public purpose, you do not need to verify the Public Body entity’s identity, nor the identity of the instructing human being.

Publicly Traded or Reporting Issuer Entities

If your client is a corporation whose shares are publicly traded on the stock exchange or is an organization which is a reporting issuer under Canadian securities law, you do not need to verify the entity’s identity, nor the identity of the instructing human being.

Corporations and other Similar Registered Entities

If your client is a corporation or another entity like a limited partnership, co-op or limited liability partnership etc. that is registered with a government registry (e.g. The Companies Office), here’s how you verify the entity’s identity:

1. First, verify the identity of the human being giving you instructions on behalf to the entity, just the way you would if that human was your client. The Law Society Education Centre has helpful reference material on Client ID Verification.
2. Confirm that the entity exists and is registered. This is easy. Order a Certificate of Corporate Status from the Government registry. In Manitoba, that would be through The Companies Office Online Services.
3. Obtain and record the names of all directors of the entity. These should be in the annual return and minute book.
4. Make reasonable efforts to obtain the names and addresses of all persons who own, directly or indirectly, 25% or more of the organization or of the shares of the organization – basically what would be in the Corporation’s own Register of Individuals with Significant Control.
5. Make reasonable efforts to obtain and record information establishing the ownership, control and structure of the organization.
6. Keep a record of your searches and inquiries.

Trusts, Partnerships and other Non-Registered Entities

If your client is a trust, a partnership or other organization that is not registered with a government registry, you can’t do a search. Here is what you must do to verify the non-registered entity’s identity:

1. First, verify the identity of the human being giving you instructions on behalf of the entity. Remember, the Law Society Education Centre has helpful reference material on Client ID Verification.
2. When your client is a trust, make reasonable efforts to obtain the names and addresses of all trustees, all known beneficiaries and the settlors of the trust. Because trusts generally are not registered anywhere, you will have to obtain this information from the trust documents with assistance from the instructing human and the trust’s professional advisors.
3. When your client is another type of non-registered entity, the organization’s identity must be verified by reviewing a copy of the organization’s constating documents, like the partnership agreement, articles of association, or any other similar record that confirms its existence as an organization.
4. Keep a record of the documents you reviewed and your inquiries.

Timing: The verification of the entity should be completed not later than 30 days after you have been retained and instructed on a financial transaction.

Note: If you have verified the identity of an entity once, you do not have to verify the entity’s identity again in future financial transactions unless you have reason to believe the information has changed.

Alternative Measures

Sometimes, despite your best efforts, you are not able to obtain or confirm the accuracy of the information you need to verify the identity of an entity. In those rare cases, here is what you can do:

1. Take reasonable measures to ascertain the identity of the most senior managing officer of the organization.
2. Think about whether:
   1. the information the client has given you about its activities;
   2. what the client has told you about the source of funds, and
   3. the client’s instructions on the transaction are consistent with both the purpose of this retainer and what you know about the client.
3. Assess whether there is a risk that you may be assisting in or encouraging fraud or other illegal conduct.
4. Keep a record of the results of your determination and assessment.
5. Complete the verification not later than 30 days after receiving the instructions on the financial transaction.

And don’t forget! On every financial transaction, you must ask the client the source of the funds. And, if you obtain information that causes you to believe you would be assisting a client in fraud or other illegal conduct, you must withdraw from representing that client.

An entity may be just a legal construct with criminals, money launderers and fraudsters behind it. Whether you are dealing with an individual or an entity, you must verify identity. When you’re verifying the identity of an entity, search the relevant registry and/or the relevant documents, confirm who directs the entity and has the power to make decisions, and find out who the shareholders or stakeholders are so you can see who might benefit from the transaction.

Don’t be duped by criminals, money launderers and fraudsters. Verify the identity of the entity.

Don’t forget to check out the Anti-Money Laundering Resources on the Law Society website. Also available is a 15-minute Online Learning Byte offering a quick refresher (and CPD hours) for lawyers and law firm staff.

For more information visit the Anti-Money Laundering Resource Library:

There are some clients who do NOT have valid government issued photo ID such as a driver’s license or passport. For example, an elderly client selling the family home or their interest in the family business.

So, how do you verify the ID of someone who can’t flash you their government issued photo ID? You can use two pieces of information (‘trusted documents’) from a reliable source.

This two-piece method requires some advance planning because the two trusted documents must be original – not a photocopy or electronic image like a digital photograph, screen capture or scanned copy. Most clients will not be carrying these documents in their wallets and will need to be instructed to either bring them with them, deliver or snail mail them to you.

How Does this Two-Piece Information/Trusted Document Method Work?

What is a Reliable Source?

The two trusted documents have to come from a reliable source. Federal, provincial or municipal governments, crown corporations, utilities (hydro, gas, telecommunications companies) or financial institutions all qualify as a “reliable source.”

What Information MUST the Two Trusted Documents from the Reliable Source Include?

The trusted documents must include:

1. the client’s name and address; or
2. the client’s name and date of birth; or
3. information that contains the client’s name or confirms they have a deposit account or credit card or other loan with a financial institution.

Examples of acceptable trusted documents include:

• CPP statement
• vehicle registration
• municipal property tax assessment
• CRA issued communication including Notice of Assessment, GST Credit Statement, T4
• utility bills
• foreign travel visa
• record of employment
• government benefits statement
• birth certificate
• permanent resident card
• citizenship certificate
• marriage certificate
• credit card statement
• mortgage statement
• bank statement
• registered investment account statements (e.g. RRSP, TFSA or RRIF)
• insurance documents (e.g. home, auto or life)*

MIX – Don’t Match!

You must have two trusted documents from two different reliable sources. This means you can’t use the client’s October and November TD Visa statements. But you could use the October TD Visa statement and an October President’s Choice Financial Master Card statement. And in case you were wondering, the reliable source is the issuer of the information – like the financial institution or Hydro or MPI – not your client.

You Need to See the Original

The two trusted documents must be original – not a photocopy or electronic image like a digital photograph, screen capture or scanned copy.

If your client gets their information from reliable sources electronically, they can show them to you on their mobile phone or they can log into their account at your office. You can look at the document the reliable source has emailed to them or see the statement on the reliable source’s mobile app or secure website, looking over the client’s shoulder. Now that you’ve seen the original, the client can then transmit that trusted document to you or you can take a screen shot or even a cellphone photo of it for your file.

Using Information from a Reliable Source When You are NOT Meeting with the Client in Person.

If you are not meeting with the client in person and the client has the two trusted documents in a hard copy original format, they can snail mail or deliver the original trusted documents to you so you can copy it and mail it back to them.

If the client receives trusted documents from a reliable source electronically, 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 or app. You may not be able to open those documents because access to them often requires your client’s log-in and password. If you can’t open the documents, you may have to arrange an in-person visit by you or through an agent. This might delay the required verification, so plan ahead.

For more information visit the Anti-Money Laundering Resource Library:

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

1. You or someone else in your office or the previous lawyer on the file has previously verified the Client’s ID in person.
2. 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.)
3. 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.
4. The credit check method, seldom used by lawyers, but still an option.
5. 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: