KYC (Know Your Client) has long been treated as a necessary administrative hurdle in escrow transactions. But for Canadian law firms supporting M&A, commercial deals, private placements and real estate transactions, the landscape has shifted.
Escrow matters have become more complex, cross-border, time-compressed and risk-exposed. With regulators and Law Societies signalling higher expectations for client verification, and fraud attempts growing more sophisticated, the “old way” is becoming a liability. Clients increasingly judge the quality of a firm not just by the legal advice, but by the smoothness of the onboarding experience.
Today, digital KYC is shifting from a back-office function to a strategic advantage – one that can reduce delays, improve accuracy and strengthen a firm’s ability to deliver confidence at closing.
Based on market trends we’re seeing, here are the ABCs of modern KYC and why they matter for Canadian firms today.
A: Accuracy in a Higher-Risk Environment
Escrow transactions typically require onboarding a diverse mix of counterparties: buyers, sellers, investors, lenders, trustees, holding companies and cross-border entities. Each brings its own identity documents, risk profile and jurisdictional requirements.
This complexity highlights structural weaknesses in traditional, paper-based KYC processes:
- Manual forms and data entry introduce human error.
- Email-based document exchange increases exposure to phishing or man-in-the-middle attacks.
- Duplicated spreadsheets and unstructured PDFs create version-control nightmares.
- Audit trails are often fragmented, making it difficult to prove compliance retrospectively.
For firms, the consequences can be significant: delayed closings, disputes over verification steps or unexpected follow-up requests from regulators. Digital KYC solves these challenges by capturing information once, validating it automatically and maintaining an immutable record of every verification step. This improves both accuracy and defensibility – critical in a world where escrow releases depend on demonstrating proper due diligence.
B: Better Client Experience, Less Friction
Ask any partner managing escrow: clients rarely complain about the legal work. They complain about the paperwork.
Traditional onboarding often requires clients to submit repetitive information, send sensitive documents through unsecured email, navigate unclear instructions and follow up repeatedly to confirm receipt. As deal timelines compress, these friction points are magnified.
Digital KYC replaces this experience with a guided, secure workflow that clarifies requirements, enables safe document upload and provides real-time status updates.
- For clients: It feels modern, professional, and secure.
- For firms: It reduces time spent chasing documents, allowing legal teams to focus on high-value advisory work rather than administrative coordination.
This also supports recurring or multi-stage escrow processes (such as staged M&A earn-outs or construction holdbacks) without forcing the client to restart onboarding from scratch.
C: Control, Compliance, and Closing Certainty
The most compelling benefit of digital KYC is the visibility it gives firms and their escrow partners.
Centralized Oversight: A single dashboard allows teams to see who has completed KYC, where files are stalled and which participants require enhanced review. This reduces last-minute surprises and helps firms stay ahead of potential closing blockers.
Automated Rules and Checks: Digital systems can consistently apply sanctions screening, jurisdictional restrictions and thresholds for enhanced due diligence. This reduces the risk of error and strengthens compliance with evolving anti-money laundering (AML) standards.
Time Savings: Digital KYC reduces the internal churn that typically accompanies escrow onboarding: fewer emails, fewer signature chases, and fewer reconciliations between versions. That time goes back to lawyers and staff who can reinvest it in client strategy.
A New Expectation in the Escrow Lifecycle
Digital KYC has come a long way from a “nice-to-have” add-on. It has emerged as a core part of how modern escrow practices deliver accuracy, security and efficiency.
At Odyssey Trust Company, we’ve seen first-hand how digital verification and streamlined onboarding improve outcomes for law firms – not only at the closing table but across the full lifecycle of multi-party transactions. As complexity continues to rise, firms that modernize their KYC experience will be better equipped to manage risk, deliver smoother closings, and meet the evolving expectations of both regulators and clients.
Bryce Szela is the Chief Growth Officer at Odyssey Trust Company, where he leads strategic expansion and innovation initiatives. With nearly 15 years of experience in B2B and legal technology, Bryce specializes in scaling solutions for law firms, financial institutions, and capital markets.
