New Client ID Rules: Counterpoint
A couple of days ago, David Bilinsky blogged on Slaw about the new Client ID rules that have come into force in most jurisdictions in Canada (Slaw: New Client ID Rules). The rules are an attempt by the legal profession’s regulators to try to get the federal government to back off from attempting to undermine solicitor client privilege in pursuit of money launderers.
While I’m no fan of money laundering, I have to say I’m not a fan of the new rules.
The purpose of the rules is to “know your client” in the same ways that banks are supposed to know theirs. But imposing this rule in cases where no money or valuables will pass through the lawyer’s trust account may has implications for access to justice, lawyer efficiency and raises privacy issues that are not adequately addressed.
I strongly believe that individuals should have a right to anonymity, subject only to reasonable restrictions. While clients should not be able to use a lawyer’s trust account anonymously, I haven’t heard any compelling arguments as to why a lawyer would need to confirm a person’s identity before giving them simple legal advice. Lawyers frequently get calls out of the blue from strangers or from friends of clients who need quick advice in order to effectively preserve their rights. The new rules impose a barrier to being able to do that. There may be other circumstances where a client may wish to (and have a compelling reason to) remain anonymous to the person from whom they are seeking advice.
The rules affect efficiency because they impose a requirement to confirm the client’s identity each time a new matter is commenced. Even for those clients with whom you deal in a daily basis.
And the privacy angle (there’s almost always one): The rules require that you keep a copy of official government ID for clients for whom you have to verify identity. It is not enough to have inspected them, but a copy must be made and kept. But for how long? Privacy laws require that you only collect personal information that is necessary for the purposes and you only keep it for as long as is reasonable to fulfill those purposes. This identity requirement is pushing the line and may actually go a little over it.
In my opinion, the new rules are overkill for addressing what may or may not be a real problem.
I agree with David. The rules seem to be typical overkill to address an issue, without enough thought as to their effectiveness.
I can’t resist chiming in when all three of us are David and David says he agrees with David!
Seriously thou, GST collections and returns, trust account requirements and many other tasks that lawyers have to perform daily as part of the running of their office all affect efficiency..but they are all part of the price we pay to maintain our status as legal professionals.
These are new rules that are not yet finalized in most jurisdictions across Canada. And I know that regulators in each of the Law Societies are spending a great deal of time and effort trying to shape them into a form that is workable and also meets the needs of the Federal Government with regard to addressing money laundering. I for one agree that lawyers should not, from a legal, ethical or moral standpoint, play a part in an activity that is not only illegal, but undermines the very society in which they live.
Of course the new Rules are a balancing game – between all the competing points of view. Since we are a self-regulating profession, the members should be involved in the dialogue, provided that it is constructive and aids the further development of the school of thought around the Rules.
I don’t necessarily agree that a client is entitled to anonymity when they approach a lawyer – I think a lawyer is entitled to know who is their (ultimate) client. This is only good business sense and prudent practice/risk management. Solicitor-client confidentiality then protects that information from disclosure to the State as well as third parties. That is one of the balancing acts of the new Rules – to protect the fundamental foundations of the profession in a manner that meets the needs of Society to prevent money laundering.
Yes there are still unanswered questions. But this is a very real problem with the distinct possibility that if we don’t deal with it as a self-regulating profession, the Government will step in and legislate a solution. I don’t think that any lawyer welcomes that possibility.