Know Your Client
Know Your Client
Thompson Dymond complies with the Know Your Client requirements of the Law Society of Ontario, and as required by various lenders, government agencies and other law firms as are required during the course of a client’s retainer.
Key provisions of the Law Society of Ontario requirements include the following; however these are minimum requirements only and Thompson Dymond reserves the right in all cases to insist on more stringent requirements:
IDENTIFYING OUR CLIENTS:
The standards for identifying clients apply whenever we accept new clients and may apply when accepting new retainers from existing clients:
We must identify our client whenever we are retained to provide legal services, except when we are acting as an agent for another lawyer or paralegal who has already identified the client or when we are acting for a client who has been referred to us by another lawyer or paralegal who has already identified the client.
We are expected to exercise due diligence to satisfy ourselves that the other lawyer or paralegal has already identified the client. This would involve asking the other lawyer or paralegal to confirm that he or she has complied with the requirements of the by-law.
When we are retained by an individual, we must get the person’s full name, home address and telephone number, and occupation. Where applicable, we must also get their business address and telephone number.
When our client is an organization (a corporation, partnership, fund, trust, co-operative or unincorporated association) we must get and record its full name, its business address and business telephone number (if any), the general nature of the business (if other than a financial institution, public body or public company), and the name, position and contact information of the person or persons instructing us in the matter. Where applicable, we must also record its incorporation or business identification number and where it was issued.
When our client is a financial institution, a public body or a public company (i.e. not a private company), we do not need to obtain or record the nature of the business activities it is engaged in.
If our client is acting for or representing another person we must obtain the same information for that other person as we would if that person was our client: their full name, home address and telephone number, their occupation, and where applicable their business address and telephone number.
The same requirement applies if the third party is an organization or company: we have to get all of the information we would get if we were representing the organization or company directly.
VERIFYING CLIENT IDENTITY:
The standards for verifying client identity apply when we engage in or provide instructions to others with respect to receiving, paying or transferring funds:
Identification refers to the basic information we need to get about our client to know who they are whenever we are retained: their name, address etc. Verification refers to the information we need in order to confirm that our client is who or what they say they are. Verification is required only when we are acting for a client or giving instructions on behalf of a client regarding the receiving, payment or transferring of money.
In the case of an individual client we must identify the client when retained to act and must verify their identity before or when we give instructions or act on their behalf to receive, pay or transfer funds. The same is true for verifying the identity of the person or persons authorized to instruct counsel for a client that is a corporation or other organization.
When our client is not an individual we have 60 days from the time we give instructions or act on behalf of our client to receive, pay or transfer funds to verify their identity.
With respect to individuals, as long as we recognize the client we do not have to verify the identity of an individual more than once.
We don’t have to verify the identity of a client that is an organization if we have already done so. This exception also applies to verifying the identity of the person or persons instructing us on behalf of our corporate client and to obtaining names of directors and owners. However if the person instructing us has changed involving the receipt, payment or transfer of funds, we must verify the identity of the person instructing we unless we have previously done so.
We don’t have to verify our client’s identity when the money involved is paid by or to a financial institution or a public body such as a department of the federal, provincial or territorial government, a city, or a hospital, a company other than a private company, a subsidiary of a public body or company that is not a private company where the financial statements of the subsidiary are consolidated with the financial statements of the public body or company. This means the only companies whose identity must be verified are companies whose shares are not publicly traded (i.e. private companies).
There is no requirement to verify the identity of a client if the only funds involved are paid or received as a settlement of legal or administrative proceedings.
If our client is an individual, we must look at an original identifying document that we reasonably believe to be independent and reliable, such as a government issued driver’s licence, birth certificate, passport, or where permitted, a provincial or territorial health insurance card. We must also retain a copy of the document for our records.
We are only required to verify the identity of a corporation if it is a private company. To verify the identity of such a company we must consult documentation that is independent and reliable such as the corporation’s annual filing or a certificate of corporate status.
Reliable documents to verify the identity of a partnership would include, for example, a copy of the partnership agreement.
The documentation we will need to consult to verify the identity of a trust will vary depending on the nature of the trust. Examples of appropriate documentation might include the trust agreement or other documents establishing the trust, documents amending the trust, and documents identifying the trustees.
When our client is an organization and if we are required to verify the identity of the client, the by-law imposes special requirements. We have to make reasonable efforts to obtain and record the name and occupation of all directors, except where the client is a securities dealer. Furthermore when someone owns 25 per cent or more of the organization or the shares of the corporation, in addition to the name and occupation(s), we must also make reasonable efforts to obtain and record their address.
Yes, when our client is an individual and is in Canada, but we cannot meet with him or her, we have two options for verifying identity. Our first option is to have a commissioner of oaths or a guarantor certify that they have verified the client’s identity by looking at the sort of reliable, independent documents discussed above. The person looking at the document will have to provide us with a legible photocopy of the document that they have signed and on which they have included their name, profession and address and have identified the type and number of the identification document provided by the client. This is called an attestation in the By-Law. An attestation may be provided by a commissioner of oaths or a guarantor in Canada when the client is in Canada. The list of guarantors is similar to the list of guarantors on a passport application and includes such professionals as lawyers, Quebec notaries, doctors, dentists, pharmacists, professional engineers and veterinarians. We must exercise due diligence in ascertaining that the person providing the attestation is a member of one of these professions.
If our client is an individual and is outside of Canada or if we choose not to use a commissioner of oaths or guarantor we will have to engage an agent to conduct the verification for us. If we use an agent we must have an agreement in writing with that person and they must provide us with the information they obtain. The agent may provide the information in an attestation.
RETENTION OF RECORDS:
The by-law requires that we obtain a copy of every document we rely on to verify a client’s identity. We must also record the information we obtain to identify our client and any information and copies of documents we rely on to identify the directors and owners of 25 per cent or more of any client that is a company or other organization.
The information and documents obtained to identify our client may be kept in our client file. There is no need to maintain a separate file.
Information and document may be maintained in electronic form as long as a paper copy can be readily produced.
We have to keep the information for the longer of our professional relationship with the client, as long as is necessary to provide service to the client, and six years following completion of the work the client retained we to do for them.