Law society rules to fight money laundering are effective, says B.C. Supreme Court

The regulation of the legal profession by Canada’s law societies provides an effective and constitutional anti-money laundering and terrorist financing regime, the British Columbia Supreme Court has ruled.

In a judgment handed down September 27, 2011, the Court also said the application of the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the related regulations to the legal profession violate section 7 of the Canadian Charter of Rights and Freedoms, and is therefore unconstitutional.

The case was brought to Court by the Federation of Law Societies of Canada with support from the Law Society of British Columbia, the Barreau du Québec, the Chambre des notaires du Québec, and the Canadian Bar Association as intervening parties.

The Federation argued the federal legislation is unnecessary because Canada's law societies have already implemented rules requiring legal professionals to identify their clients, and not to accept large amounts of cash from clients except in certain circumstances. The Court accepted these arguments, and held that all legal professionals are exempt from the legislation.

"We are pleased that the court has recognized the important and proactive role the law societies are playing in the fight against money laundering," said Ronald J. MacDonald QC, President of the Federation.

"Canada's law societies share many of the same objectives as the federal government in fighting money laundering, and in keeping with their public interest mandate they have implemented rules and rigorous enforcement measures to deal with any allegations of unethical conduct or money laundering that may involve members of the legal profession."

For more details, see the news release and case summary issued by the Federation on September 28, and read the complete BCSC decision.