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Mack’s Criminal Law Bulletin | Proceeds of Crime

S.C.C. found Proceeds of Crime (Money Laundering) records-disclosure duties to violate principles of fundamental justice



Mack’s Criminal Law Bulletin



By: Dallas Mack



Federation of Law Societies of Canada v. Canada (Attorney General), 2015 CarswellBC 295 (S.C.C.)

2.2 — FEDERATION OF LAW SOCIETIES OF CANADA

Facts

“The Proceeds of Crime (Money Laundering) and Terrorist Financing Act [Act] seeks to detect and deter these crimes and to facilitate their investigation and prosecution: s. 3. The Act pursues these objectives in three main ways: by establishing record keeping and client identification standards, by requiring reporting from financial intermediaries, and by putting in place an agency to oversee compliance — the Financial Transactions and Reports Analysis Centre of Canada (”FINTRAC”)” [para 11].

Regulations related to the Act set out how it applies to legal counsel: Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, SOR/2002-184. Those Regulations obliges lawyers to “comply with client identification and record keeping requirements” in order to deter and detect illicit transactions. In short, the Act and Regulations provide as follows.

First, the Act and Regulations require lawyers to identify persons on whose behalf they act as financial intermediaries. Second, there is a requirement that records be kept for transactions in excess of $3000. Third, the provisions provide FINTRAC with broad access to the information kept by legal counsel. The Supreme Court set out the challenged provisions as follows:

Sections 5(i) and 5(j) of the Act make the professions specified in the Regulations subject to the verification and record keeping requirements in Part 1 of the Act. Section 33.3 of the Regulations make legal counsel subject to Part 1 of the Act when receiving or paying funds or giving instructions to pay funds (other than those received or paid in respect of professional fees, disbursements, expenses or bail or when doing so on behalf of their employer). Section 33.4 of the Regulations sets out the recording keeping requirements. Section 33.5 of the Regulations relaxes these requirements where funds are received from the trust account of a legal firm or legal counsel. Section 59.4 of the Regulations imposes the identification requirements. Section 11.1 of the Regulations sets out the information that must be collected and retained in the course of verifying identity.

Sections 62, 63 and 63.1 of the Act provide for search and seizure powers. Section 64 provides limitations on the search and seizure powers in relation to material for which solicitor-client privilege is claimed. [Paras 21-22].

Ruling

Cromwell J., on behalf of the majority, first concluded that the provisions in question limit the “liberty of lawyers” [para 70]. Cromwell J. noted that lawyers who “do not comply with the Act’s requirements . . . are liable to prosecution and imprisonment” [para 71]. Second, Cromwell J. considered the principle of independence of the bar — a principle advanced in two ways by the applicants, only one of which was accepted:

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