money falling out of briefcase

Pay attention to lender instructions on verifying the identification of individuals or corporations

Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”) has recently changed the identification verification requirements for financial institutions to fulfill their obligations under Canada’s anti-money laundering legislation

Financial institutions rely on lawyers to verify the identification of individuals as part of the closing process as most home buyers (and some borrowers as part of a refinance) will sign mortgage documents in a lawyer’s office.

Client identification and verification requirements are not new for lawyers. Various provincial and territorial law societies of Canada have rules on client identification and verification which are designed to assist in the prevention of fraud, money laundering and terrorist financing. They set out the steps lawyers must take, and the records they must retain, to identify clients and verify their identities.

However, lawyers now need to pay special attention to lender’s instructions as they may have changed.

If you use a document production and file management system (such as LawyerDoneDeal’s web-based RealtiWeb® program), checklists, reminders and “verification of identity” documents are generated for you (based on your input) – making it fool proof and easy to comply with the requirements. If you don’t already use a system – the time to take a second look is now.

Financial institutions such as banks and credit unions must report suspicious and certain other transactions to the FINTRAC.

The FINTRAC’s mandate is to facilitate the detection, prevention and deterrence of money laundering and the financing of terrorist activities, while ensuring the protection of personal information under its control. It reports to the Minister of Finance and ensures compliance of financial entities with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (“PCMLTFA”) and associated regulations.

Financial entities must fulfill specific obligations such as verifying the identity of clients for certain activities and transactions according to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (“PCMLTFR”).

Changes to the methods to verify the identification of individuals came into effect in June 2017, however, the transition period to adopt the new methods has been extended to January 23, 2018.

This article is by Mahwash Khan, Communications Counsel at LAWPRO.

Categories: Fraud