Lawyers engaged in transactions involving transfer of funds must verify their client's identity
The Federation of Law Societies has issued guidance requiring the use of technology capable of verifying the authenticity of government-issued photo ID, especially when the verification is conducted remotely.
As a result of this development, the temporary relief measure allowing the verification of client IDs over video calls will be extended until January 31, 2024. The temporary measure was implemented during the pandemic. Beyond January 31, 2024, law society members are required to return to in-person verification of client IDs or adopt remote ID authentication technology following FLS guidelines.
There are three methods for verifying a client's identity when lawyers are engaged in transactions involving the transfer of funds:
- Reviewing government-issued photo ID.
- Reviewing the client's credit file.
- Utilizing the dual-process method, which involves reviewing two original, valid, and current documents or information from independent and reliable sources.
The focus of the recent guidance is on the first method – reviewing government-issued client IDs. To complete the verification using a government-issued ID, lawyers must either verify the ID in person or opt for remote verification using authentication technology compliant with FLS guidelines. If lawyers opt for in-person review, they can use remote authentication technology to verify the identity document.
In a note to its members announcing the guidance, the Nova Scotia Barristers’ Society encouraged its members to perform due diligence in selecting technology providers. Money laundering and identity fraud remain serious concerns, necessitating continued vigilance and risk management by legal professionals.
The most common method chosen to verify a client's identity is the government-issued photo ID method. This is usually completed in person during a face-to-face meeting with the client. The guidance cautioned lawyers to confirm that the person signing the closing documents is the same person whose ID they verified.
Remote verification with Authentication Technology
If the individual is not present, lawyers may use them if they have a process in place to authenticate the government-issued photo identification document and to determine that it is valid and current. Lawyers or their agents may use technology to compare scanned documents against known characteristics, security features, or markers to establish authenticity.
Additionally, to confirm the document's validity and current status, lawyers may conduct a live video call with the client, comparing features in real-time. Alternatively, lawyers can request clients to take a photo using their mobile device and apply facial recognition technology to confirm their identity. Notably, viewing a photo ID over a video call alone is insufficient for determining document authenticity.
The NSBS said that authentication technology is still new and in the process of being introduced in Nova Scotia. It suggested exploring resources such as the Law Society of Alberta's list of approved sandbox participants and the directory of identity management and proofing products for information on available technology. As the field continues to evolve, the NSBS anticipates these resources may provide a starting point in assessing a technology product.
In conjunction with these guidelines, the Federation of Law Societies has also launched an online learning program addressing anti-money laundering and terrorist financing responsibilities and best practices for legal professionals. The program has five modules and covers various aspects, including understanding the issues, assessing and managing risks, due diligence requirements, proper use of trust accounts, and handling cash transactions.
