Lawyers and Customer Due Diligence on Non-Clients

The Department of Internal Affairs (DIA) is aware that law firms are seeking clarification on how to meet their CDD obligations under the AML/CFT Act relating to non-clients using law firm trust accounts. 

DIA hold the interim view that Law firms are required to meet the usual CDD requirements and other obligations under the AML/CFT in relation to their own clients. They do not however at this stage have to conduct CDD on non-clients using their trust accounts. Law firms will still be required to meet all broader obligations under the AML/CFT Act, these include:

a.) Account Monitoring obligations in relation to funds received into a trust account from parties other than (but ultimately for) their client

b.) Enhanced CDD is required on those funds from the non-client if required (e.g. s22(1)(c) or (d) of the Act).

DIA will provide further guidance in relation to this issue as we develop our supervisory position in relation to law firms and our understanding of how non-clients use law firm trust accounts. As such DIA’s position on this topic may change, we will however ensure that we work with the regulated entities in order to incorporate new information and consult with our partner AML/CFT Supervisors. (via Department of Internal Affairs)