No tool satisfies them, because the rules name documents, a responsible licensee and a record. But British Columbia now expressly allows reliable technology to confirm an electronic image of an ID is genuine.
Key takeaways
The question is usually asked the wrong way round. No product “satisfies” client identification rules, because the rules are written as obligations on a licensee: obtain this information, verify identity using one of these listed methods, be satisfied the documents are authentic, valid and current, and record what you did and when. A tool supplies evidence into that process; it cannot be the person on whom the duty sits. What has changed is that one Canadian regulator now says in terms that technology may be used to establish that an identity document is genuine — a real development, and narrower than most vendor marketing implies.
Under Part III of the Law Society of Ontario’s By-Law 7.1, a licensee must comply with the client identification requirements whenever retained to provide professional services — name, address, occupation, and the equivalent details for anyone giving instructions or any third party the client is acting for. The client verification requirements are triggered by something narrower: engaging in, or giving instructions in respect of, the receiving, paying or transferring of funds.
Where the client is an organisation and funds are involved, there is a further layer: the names of the directors, and reasonable efforts to obtain the names and addresses of anyone who owns 25 per cent or more, along with information establishing ownership, control and structure. If that cannot be obtained, the by-law sets out an alternate path involving the most senior managing officer and a recorded risk assessment. Identification may be carried out by an employee of the firm acting on the licensee’s behalf; verification has stricter machinery, dealt with below.
The by-law gives a closed list for an individual: a government-issued photo identification document (excluding municipal documents); information in the individual’s credit file located in Canada and in existence for at least three years; or any two pieces of information from different sources that are not the individual, the licensee or the licensee’s agent. For a registered organisation it is a written confirmation from a government registry; for a trust or partnership, the constating documents. Documents and records used must be authentic, valid and current, other information must be valid and current, and everything obtained must be recorded with the date on which it was obtained — which quietly rules out an undocumented check done on a phone screen at a closing.
There is also a rule about who may act for you. Verification may be performed by an employee or another licensee in the firm, or by an individual acting on the licensee’s behalf under a prior written agreement, from whom the licensee must obtain the information and satisfy themselves both that it is valid and current and that the individual complied. The by-law contemplates a person there, not a service.
BC’s rules run in parallel and are not identical. Under Law Society of BC Rule 3-102, where a lawyer provides legal services in respect of a financial transaction they must obtain and record information about the source of money and verify the client’s identity using listed documents, which must be valid, authentic and current. The individual method is a government-issued photo identification document used in the presence of the individual to verify that the name and photograph are theirs.
Then the amendment that answers this article’s question. Added in March 2024, Rule 3-102(2.1) provides that an electronic image of a government-issued document may be treated as authentic provided the lawyer has used reliable technology to confirm that the identification document is genuine, and has confirmed that the name and photograph are those of the individual. Read the two limbs carefully: the technology confirms the document; the lawyer confirms the person.
Firms routinely conflate the two, and it matters. FINTRAC’s guidance on methods to verify identity sets out the government-issued photo identification method, the credit file method and the dual-process method for reporting entities, and it expressly contemplates technology: where a person is not physically present, the photo identification method may be used provided you have a process to authenticate the document — for instance a technology that compares its features, security features and markers against known characteristics. Photo identification issued by municipal governments is not acceptable.
Legal counsel are not in that regime. The Federation of Law Societies notes that Model Rules developed by the Federation and implemented by Canada’s law societies impose comprehensive know-your-client requirements, updated in 2018, and that in March 2015 the Supreme Court of Canada held that provisions of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act requiring legal counsel to collect and retain information not required for client representation, together with expansive search powers and inadequate protection for solicitor-client privilege, offended the Charter. A lawyer designing an identity process therefore works from the law society rules; a reporting entity works from FINTRAC’s. Neither should copy the other’s checklist.
It is the same division of labour as the rest of the sequence, described in AI for KYC at a professional firm and AI for client onboarding at a Canadian firm. Everything the tool touches here is personal information, so the OPC’s principles on limiting collection, use and disclosure apply to your design as much as to the vendor’s.
An Ontario real estate practice acts on a purchase for two individuals and a numbered company. Identification is captured at intake in structured fields; extraction pulls the directors and shareholding from the corporate documents, and the file records the date each item was obtained. Because funds will be received, verification is required, and both individuals attend so the lawyer can verify their government photo identification directly.
The same firm instructs BC counsel on an unrelated matter, where one client cannot attend. There the electronic image route is available: reliable technology confirms the document is genuine and the lawyer confirms the name and photograph. The Ontario file cannot borrow that route, because Ontario’s by-law does not contain it. Two provinces, one firm, two written processes.
Can an identity verification vendor act as our agent?
Ontario’s rule speaks of an individual acting on the licensee’s behalf under a prior written agreement. Read the by-law with your own arrangement in front of you rather than relying on a vendor’s summary.
Do we have to re-verify an existing client?
Ontario’s by-law allows reliance on previous verification where the licensee has no reason to believe the information or its accuracy has changed. The practical difficulty is knowing when it has, which is why change-flagging is worth automating.
Is a selfie match enough?
It is not the test. In BC the technology’s role is to confirm the document is genuine, and the lawyer confirms the name and photograph belong to the individual. In Ontario the listed methods do not include a biometric match at all.
A 30-minute call is enough to tell you whether AI pays for itself here.
