Recent rule amendments promulgated by the Law Society of Upper Canada have imposed certain "Know Your Client" requirements on lawyers in Ontario and it is anticipated that the Barreau du Québec will soon impose similar rules. Law societies across Canada, which are the governing bodies of the legal profession, are in the process of adopting similar rules. The purpose of the new requirements, which have been encouraged by the federal government, is to enhance public protection by assisting in the prevention of activities such as money laundering. The requirements are not dissimilar to, but are generally less onerous than, the regulation in European countries that has for some time surrounded the opening of bank accounts.
Accordingly, Davies Ward Phillips & Vineberg LLP has implemented certain changes to our procedures, principally our file opening and trust account procedures, in order to ensure that we comply with our obligations as efficiently as possible while minimizing the impact on our clients. These changes will at first be implemented in our Toronto office and are expected to apply to our Montréal office at a later date.
When we are retained to act on a new file, whether for a new or an existing client, Davies will now collect certain information in addition to the client information we already routinely obtain. For clients that are organizations, this will normally include information such as the clients' incorporation or business identification number and jurisdiction of formation. For individuals, we must also record the clients' occupation, home address and telephone number. Pursuant to the new rules we must also obtain this information about any third parties for whom our client may be acting in the matter. Except to the extent relevant information changes from time to time, it has to be obtained only once per client.
Additional requirements may apply when the firm is engaged in or gives instructions with respect to the payment or receipt of funds or negotiable instruments, for example, if our trust accounts are used in connection with a client transaction. For clients that are organizations, we must obtain additional information, including the name and occupation of each director and details regarding any persons owning 25% or more of the organization or its shares. We are also required to examine an official document confirming the organization's existence, such as a certificate of good standing or documents evidencing the organization's formation. In addition to these identification requirements, we must take reasonable steps to verify the identity of the individual client or, in the case of an organization, of the client's representative instructing the firm on the client's behalf. This may involve examining an individual's identification document (such as a driver's licence or passport) and retaining a copy for our files. In certain instances, a third party, such as the client's local counsel or in-house counsel, may examine such documentation on our behalf.
or speak to one of our lawyers.
Further information regarding the new client identification and verification requirements is available at The Law Society of Upper Canada. If you have any questions regarding the processes we have in place to comply with these requirements, please contact any one of the Davies lawyers with whom you deal. We thank you in advance for your understanding and cooperation.
For additional information, please contact Mark Connelly in the Toronto office at (416) 863-5526 or Alan Golden in the Montréal office at (514) 841-6414.
Davies Ward Phillips & Vineberg LLP, with over 250 lawyers, practises nationally and internationally from offices in Toronto, Montréal, New York and an affiliate in Paris and is consistently at the heart of the largest and most complex commercial and financial matters on behalf of its North American and overseas clients.
The information and comments herein are for the general information of the reader and are not intended as advice or opinions to be relied upon in relation to any particular circumstance. For particular applications of the law to specific situations, the reader should seek professional advice.