Lawyer’s Guide to Detecting and Preventing Money Laundering
As you are all aware, it is illegal for any person in Canada, including members of the legal profession, to knowingly participate in crimes involving money laundering or terrorist financing. To ensure that legal professionals are not unwittingly used by their clients to help with these activities, the Law Society enforces rules of conduct based on model rules developed by the Federation of Law Societies of Canada. Please refer to Parts XV and XVI of the Rules for full details regarding the following:
Members of the legal profession are prohibited from accepting more than $7,500 in cash to ensure that individuals involved in money laundering or terrorist financing cannot use their legal advisors’ trust accounts for illegal activities.
Client Identification and Verification Rules
Members of the legal profession are bound by strict “know-your-client” rules to ensure that they are providing advice only to bona fide clients whose identity can be reliably ascertained.
In March 2015, the Supreme Court of Canada struck down certain provisions of Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act and regulations pertaining to the legal profession. That decision by the Supreme Court concluded a 14 year legal debate between the Federation and the government of Canada over application of the federal anti-money laundering and terrorist financing regime to lawyers and Quebec notaries. The regulations would have forced lawyers to collect information about their clients and their financial transactions and turn that information over to the government on demand. The Supreme Court found those requirements violated protection in the Charter against unreasonable search and seizure, and rights of security of the person. The adoption of the above Rules by all law societies was important to the Court in reaching this decision.
Late last year, the International Bar Association (IBA) published a guide aimed at providing members of the legal profession with practical guidance for detecting and preventing money-laundering. The following quote from the IBA’s website describes the guide:
A Lawyer’s Guide to Detecting and Preventing Money Laundering addresses the responsibilities of lawyers in many jurisdictions in this area and, as such, is the first of its kind. It focuses on the legal obligations lawyers have in various situations in terms of their own compliance with anti-money laundering (AML) laws and illustrates the latest detection techniques being employed by lawyers to avoid involvement in money laundering. In addition, the Guide provides thought-provoking commentary on the underlying ethical obligations that lawyers have – for example, being alert to finding themselves involved in criminal activity and taking care to avoid facilitating the work of criminals.
A link to the electronic version of the guide can be found on the IBA website: http://www.ibanet.org/Article/Detail.aspx?ArticleUid=f272a49e-7941-42ee-aa02-eba0bde1f144
You may find this information of use as you comply with the Rules outlined above.
Law Society of Newfoundland and Labrador