REMINDER: Anti-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 strict “know your client” rules of conduct based on model rules developed by the Federation of Law Societies of Canada, specifically, the No Cash Rule at Part XV and the Client Identification and Verification Rules at Part XVI.
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 the 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 the 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.
However, the government of Canada has developed new regulations and the Federation of Law Societies recently struck a Working Group to examine those and compare them to the above-noted Rules. Below is a report from that group which proposes changes to the rules regarding client identification/verification and no cash in order to ensure that they remain robust, effective and consistent with the new federal regulations. The Working Group is also in the process of developing additional guidance documentation to assist lawyers in their compliance with the current, and any revised, rules.
The Law Society is seeking your input on the changes proposed in this report. Any comments/concerns can be sent by email to: email@example.com by 16 February 2018.