Question

Note: Not sure what subject this should be under. It's from a business law class.

As part of federal anti-terrorism initiative, the federal government enacted the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. Under the federal legislation, professionals and financial institutions are required to report suspicious transactions or large cash payments of $10,000 or more. An independent government agency (FINTRAC) investigates and analyzes reports and tracks cross-border movements of currency.

Lawyers were among the professionals covered by the Act, and real estate lawyers were particularly affected since their work involves receiving large sums of money from their clients.

The Federation of Law Societies of Canada launched a successful court challenge of the law. It argued that requiring lawyers to report on their clients was a violation of solicitor-client privilege and a breach of the constitutional right to independent counsel. The courts agreed with the Federation’s position and restricted the application of the new law. As a result, the Minister of Finance introduced amendments to the Act exempting lawyers from its reporting requirements.

In recognition of the fact that preventing money laundering is a worthy goal, the Federation developed model rules for lawyers’ codes of professional conduct. The model “know your client” rule requires lawyers to confirm their clients’ identities with independent documents and collect information such as addresses and occupations. The model “no cash” rule prohibits lawyers from accepting cash payments of $7,500 or more.

Question 1: Do you think law societies are in a better position to deal with money laundering than FINTRAC?

Question 2: This is another example of a conflict between two worthy goals. What are the arguments that justify the priority of solicitor-client privilege?

Answer 1

q1) money laundering can be done in any area irrespective of any particular area/field. AS such it should not be the sole responsibility of law society to keep a track. People in diverse fields can individually take care of the same . for eg: in companies & other financial institutions there should be strong internal control , proper audit checks , etc. for banks proper kyc regulations to be followed, no duplication of accounts , etc. independent authorities such as FINTRAC or PMLA - preventive money laundering act also are strengthening the process.

q2) solicitor client privilege implies that all legal communication between legal adviser & client cannot be disclosed until permitted by client .