This Blog was written by: Liz Bozek
Most countries, including Canada, have anti-money laundering (AML) policies, and many require that all financial institutions strictly abide by those policies to support efforts against financial crime. At the heart of these compliance measures is the ever-increasing need that institutions and professionals know exactly who their clients are and where their money comes from.
“Know your client”, or KYC as it is commonly referred to, requires enhanced due diligence in many situations, including when transactions that are ‘out of the ordinary’ are made. If a client tries to deposit a large amount of money received from an inheritance or gift into his or her account, evidence of that inheritance or gift may be requested by the financial institution prior to that transaction being completed. Detailed personal and financial information about a settlor, trustee and beneficiaries may be required when a financial institution has any dealings with an inter vivos or testamentary trust.
KYC requirements are also evident in various regulations to which lawyers and other professionals in the province are subject when verifying the identity of new clients and accepting payments towards a client’s retainer. Currently, the Law Society of Ontario (LSO) is seeking input on proposed amendments to the Model Rules of the Federation of Law Societies of Canada regarding anti-money laundering. These proposed amendments deal with the following areas:
• the “no cash” model rule;
• client identification and verification requirements; and
• trust accounting provisions.
As many of the readers of and contributors to this blog are lawyers, I thought I would direct attention to the LSO’s Call for Submissions, as any new model rules may impact the practice of all lawyers in the province. Submissions are being accepted until February 15, 2018; more information . All professionals in the financial industry, and those of us engaged in the areas of estates, trusts and philanthropy must ensure our clients are aware of the enhanced information gathering that is the new norm.