Cash Transactions and Anti-Money Laundering Policy

Purpose

People who want to hide where money comes from sometimes try to pass it through a legal professional's trust account, or to use a legal matter as cover. This policy sets NEO's rules on cash, and explains how we stop our services and our trust account from being used for money laundering, terrorist financing or fraud.

Who it applies to

Everyone at NEO: the principal and every licensee, including independent contractor paralegals, and every employee and student, especially anyone who takes payments or keeps records.

Cash

1. The Law Society limit. By-Law 9 says a licensee must not receive or accept cash from a person totalling more than $7,500 on any one client file when, for that file, the licensee receives, pays or transfers funds, or buys or sells securities, property or a business. Cash in a foreign currency counts at the Bank of Canada's official exchange rate in effect when it is received, or on a holiday, the rate on the last business day before.
2. The By-Law's exceptions. The limit doesn't apply to cash received from a bank or other financial institution, a public body, or a police officer or other Crown agent acting officially, cash received to pay a fine, penalty or bail, or cash for fees, disbursements or expenses, provided any refund of it is also made in cash.
3. NEO's stricter rule. We prefer card and electronic payments, as our Payments and Refunds Policy explains. We accept cash only at our office, only with the principal's approval, and never more than $7,500 in total on any one client file, for any purpose. We don't rely on the exceptions. No one at NEO accepts cash personally or outside the office.
4. A signed receipt every time. Every cash payment is recorded in our cash receipts book, with a duplicate receipt showing the date, who paid, the amount, the client and the file number, signed by the person who received it and by the person who paid. If the person who paid won't sign, we note on the receipt the reasonable efforts we made to get their signature.
5. Deposited promptly. Cash paid in advance goes into the trust account immediately, and no later than the next banking day. Cash paying an invoice already delivered goes into the firm's general account, never into trust.
6. Refunds. Money paid in cash is refunded only after the principal approves, and only to the person who paid it, unless a written arrangement made at the start under our Third-Party Payers Policy says otherwise.

The trust account is only for legal services

• We never pay money into trust unless it is directly related to legal services we are providing, and we never use the trust account for any other purpose. We don't hold or move money for anyone as a favour, or pass money between people where we aren't providing legal services.
• We don't keep money in trust for more than a minimally reasonable time after the legal services are done, and we return it under our Trust Accounting and Client Money Policy and Unclaimed Trust Money Policy.
• We don't pay out trust money until a deposit has fully cleared, as our Fraud Prevention Policy explains.

Knowing our client and their money

1. Identity. We identify and verify every client under our Client Identification and Verification Policy.
2. Source of funds. When we receive, pay or transfer money for a client, other than for our fees, disbursements and expenses and the other exemptions By-Law 7.1 sets out, we ask where the money comes from and record the answer and the date. For an organization, we also record its directors and make reasonable efforts to find out who owns or controls it, and record what we did to confirm that information.
3. Purpose. We make reasonable efforts to understand the purpose of every retainer.
4. Monitoring. During a retainer in which we handle money for a client, we check from time to time that the client's activities, the source of the money and their instructions still fit the purpose of the retainer, and whether there is a risk we could be assisting fraud or other illegal conduct, and we record what we checked and when.

Warning signs

Stop and tell the principal if you notice any of these:

• a payment from someone with no clear connection to the client or the matter (see our Third-Party Payers Policy);
• an overpayment followed by a request for a quick refund, or a request to refund money to a different person, account or country;
• a large deposit followed soon after by ending the retainer and asking for the money back;
• cash in unusual amounts, or payments split to stay under a limit;
• money arriving from several sources, or from abroad, without a good reason;
• instructions to pay money to people who aren't part of the matter, or instructions that make no sense for the legal work;
• reluctance to give identification or to explain where money comes from, unexplained urgency, or changed payment instructions;
• an offer to pay in cryptocurrency or another virtual currency. NEO does not accept cryptocurrency and doesn't hold it for anyone.

When something seems wrong

1. Pause. Don't accept, deposit, pay out or refund the money. Tell the principal straight away.
2. Don't discuss it with the client. The principal decides what to ask the client and what to say.
3. The principal looks into it, asks for explanations and documents, and records what was found and decided.
4. We stop and, if needed, withdraw. If we know, or ought to know, that we would be assisting fraud or other illegal conduct, we immediately stop the work that would assist it and, if that isn't enough, withdraw from the matter under our Withdrawal of Services Policy.
5. Money goes only where it belongs. Money already in trust is paid out only as By-Law 9 permits, to the person entitled to it.
6. Reporting. Paralegals and legal firms are not on FINTRAC's list of businesses that must report transactions under the federal anti-money laundering law. Our obligations come from the Law Society's By-Laws and rules, and from the criminal law, which applies to everyone. Because our duty of confidentiality continues, information goes outside the firm, for example to the police or the Law Society, only as the Paralegal Rules of Conduct and the law permit or require. The principal may get confidential guidance from the Law Society's Practice Management Helpline. If another licensee is involved, our Reporting Misconduct Policy applies.

Records

We keep the cash receipts book, identification and source-of-funds records, and monitoring notes for at least as long as By-Laws 7.1 and 9 require, as our Books and Records Policy explains.

Training

Everyone who takes payments or keeps records is trained on this policy when they start and refreshed at least once a year, and the firm keeps a record of the training.

Review

This policy is reviewed at least once a year, and whenever the Law Society's By-Laws or rules or the federal anti-money laundering law change. The principal approves every change.

Questions

Questions about this policy go to the principal. Email info@neolegalservices.com, call 647-200-3526 or toll-free 888-519-2435, or write to us at Unit 236, 1099 Kingston Road, Pickering, Ontario L1V 1B5.