6.7 – Identification of Third Parties

You may have a client who acts for or represents a third party. If your client acts for or represents a third party, you must collect the same information about that third party as if they had retained you directly. See Rule 1542(2).

The test for whether you must identify the third party depends on whether the third party is directing or instructing, or has authority to instruct or direct, as a principal instructs an agent. For example, when acting as an insurance defence counsel, you are acting for both the insurer and the insured. In other circumstances, you may have a client who is acting on behalf of a minor, or a client who is a party to a joint venture.

A third party who has a beneficial interest but does not have authority to direct the client is not subject to the Client Identification Requirements. The following are examples of third parties who are exempt:

• Non-clients from whom funds may be received for the client’s or third party’s benefit,
• Non-clients to whom clients are transferring or paying funds.

It is important that you ascertain from your client when you are retained whether a third party is involved and the role of any third party to determine your obligations under the Client Identification Rules.

See the Law Society’s Frequently Asked Questions and Answers for further guidance and examples.