If you have worked with an Ontario real estate or corporate lawyer recently, you may have been asked questions you were not expecting: Where does this money come from? Can you provide documentation of the source of your funds? What is the nature of your business? For clients who have straightforward, legitimate transactions, these questions can feel intrusive. Understanding why they are asked — and what happens with the answers — helps explain a legal landscape that has changed significantly in recent years.
Canada’s Anti-Money Laundering Framework
Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act is administered by the Financial Transactions and Reports Analysis Centre of Canada — FINTRAC. The Act requires designated persons and entities to implement anti-money laundering (AML) and counter-terrorist financing (CTF) programs, identify their clients, and report suspicious transactions.
Legal professionals were initially excluded from these obligations because of solicitor-client privilege concerns. That changed. After years of FATF pressure and a series of court decisions working through the constitutional issues, Ontario lawyers are now subject to significant AML obligations — particularly in real estate and corporate transactions where lawyers handle client funds.
What Law Societies Require of Ontario Lawyers
The Law Society of Ontario has implemented By-Law 9, which sets out detailed requirements for lawyers handling client funds in real estate, corporate, and private lending transactions. These include:
Client Identification
Lawyers must verify the identity of clients — individuals and entities — before providing many types of legal services. For individuals, this means verifying government-issued photo identification. For corporations, it means obtaining and reviewing constating documents, shareholder information, and confirming beneficial ownership.
Third-Party Determination
Lawyers must take reasonable steps to determine whether a client is acting on behalf of a third party — someone not directly involved in the transaction but who will benefit from it or who has instructed the client to conduct it. If a third party is involved, additional identification and documentation steps apply.
Beneficial Ownership
For corporate clients, lawyers must make reasonable efforts to identify individuals who ultimately own or control 25% or more of the corporation. This beneficial ownership inquiry is one of the more demanding aspects of current AML obligations and can require documentation that some clients find burdensome.
Source of Funds
In transactions where a lawyer receives cash or cash equivalents above certain thresholds, or in transactions involving trust funds from unclear sources, the lawyer may be required to make inquiries about the source of the funds. This is not an accusation — it is a professional obligation that applies to all qualifying transactions.
What Clients Should Expect
If you are working with a real estate lawyer on a purchase, sale, or mortgage transaction in 2026, expect the following at or before the initial consultation:
- A client intake form asking for full legal name, date of birth, address, and occupation
- A request for government-issued photo identification (driver’s license, passport)
- Questions about the source of purchase funds — savings, sale proceeds, gift, loan
- For corporate clients: requests for corporate documents and beneficial ownership information
- Potentially, a written source of funds declaration if the transaction involves large amounts
These are not optional questions. Your lawyer has professional obligations that cannot be waived by a client who prefers not to answer. A client who refuses to provide required identification or source of funds information may find that the lawyer cannot act for them.
Solicitor-Client Privilege: What Is Still Protected
Solicitor-client privilege remains a fundamental right in Canada, and it protects confidential communications between a lawyer and client made for the purpose of obtaining or giving legal advice. The AML obligations interact carefully with this privilege.
A lawyer’s compliance with AML identification and record-keeping requirements does not breach solicitor-client privilege. However, a lawyer is prohibited from filing certain reports (like suspicious transaction reports) if doing so would disclose privileged information. The system attempts to respect privilege while still capturing suspicious financial activity through other means.
Title Insurers and FINTRAC
As of 2024 and into 2026, FINTRAC’s expanded oversight has increasingly included title insurance companies in real estate transactions. Title insurers are now required to conduct their own client identification and source of funds verification for certain transactions — meaning that even if you have already provided documentation to your lawyer, you may receive similar requests from the title insurer.
Why This Matters in 2026
Canada remains on international watchlists for real estate-related money laundering — particularly in major urban real estate markets, including Toronto and the GTA. The regulatory response has been escalating AML obligations across the financial and legal sectors, and the trend is toward more rigorous enforcement, not less.
For legitimate clients with straightforward transactions, these obligations are a brief administrative inconvenience. For transactions involving unusual fund flows, complex beneficial ownership chains, or sources of funds that are difficult to document, the questions will be more detailed — and the legal guidance more important.
Final Thoughts
AML and KYC compliance at Ontario law firms is not bureaucratic overreach. It is a professional obligation designed to protect the integrity of legal transactions and the legal system itself. Clients who understand why these questions are asked — and come prepared with the necessary documentation — will find the process efficient and professional. Those who have concerns about specific requirements are always welcome to discuss them directly with their lawyer.
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Goldstone Law Professional Corporation serves clients across Mississauga, Brampton, Oakville, and the greater GTA in real estate, corporate, estate, and mortgage law. Whether you are buying your first home, structuring a business deal, or planning your estate, our team provides the clear, practical legal guidance you need.
Visit goldstonelawpc.com or call us at 905-595-9917. We are located at 201-186 Robert Speck Parkway, Mississauga, ON L4Z 3G1.
Disclaimer: This article is intended for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please consult a qualified Ontario lawyer.
This article is provided for general information only and does not constitute legal advice. For advice about your specific situation, please contact Goldstone Law PC directly.