by Barbara Buchanan
The Law Society of B.C.’s client identification and verification rules (Rules 3-91 to 3-102) came into effect on December 31, 2008. The rules, based on the Federation of Law Societies of Canada’s Model Rule, are designed to codify the steps prudent lawyers take in the normal course to identify their clients.
The Benchers originally adopted the rules on November 14. At their December 12 meeting, the Benchers amended Rules 3-91 to 3-95, Rule 3-97 and Rule 3-102, based on revisions to the Model Rule.
The rules, including the December amendments, are in force and available for viewing on the Law Society website (look under Publications and Forms). Copies of the rules adopted in November were included in the Members’ Manual amendment package. Note that the December amendments were not included in that package and so lawyers must view the amendments online until the next mailing.
Lawyers must take reasonable steps to identify their clients and, where a “financial transaction” (as defined in Rule 3-91) is involved, to verify their clients’ identity. Identification and verification of identity are two distinct concepts.
The rules specify timing for identification and verification procedures, procedures for verifying the identity of clients who are individuals not present before the lawyer, information and documents to be recorded and copied, and retention periods.
Lawyers are encouraged to read the rules carefully and to pay attention to the definitions. Some of the terms may not be consistent with common usage. For example, “client” includes another party that a lawyer’s client represents or on whose behalf the client otherwise acts in relation to obtaining legal services from the lawyer. When a lawyer is acting for an organization, not only does the lawyer have to obtain information about the organization itself but the lawyer must also obtain information about the person instructing the lawyer on behalf of the organization.
Some of the December rule amendments include the following:
- The verification requirements do not apply if the client is a “financial institution,” “public authority” or “reporting issuer” (Rule 3-94);
- The defined term “reporting issuer” replaced the term and definition of “public company” (Rule 3-91(1));
- The exemption from verification requirements when a lawyer “pays money to another lawyer in trust, on the direction of the client” was deleted because it could result in the source of funds not being verified;
- An exemption for electronic funds applies, provided the transfer is conducted at both ends by financial institutions in Canada or other Financial Action Task Force countries and neither the sender nor the beneficial receiver of the funds handle or transfer the funds (Rule 3-94 (c)).
Three resources are available on the Law Society website (under Practice Support) to help lawyers and law firms understand and follow the rules:
- A free online course (webcast archive);
- A question and answer document;
- A client identification and verification checklist.
For more information about the rules or the resource materials, contact Barbara Buchanan, Practice Advisor at 604-697-5816 or email@example.com.
Barbara Buchanan, The Law Society of British Columbia
This article was published in the February 2009 issue of BarTalk. © 2009 The Canadian Bar Association. All rights reserved.