Canada: Lawyers prepare for another battle

The latest set of regulations is due to come into force on 30 December. For years, the Law Societies waged a continual assault on previous attempts to bring them into the net for both suspicious and cash transaction reporting.

They argued that it was unconstitutional for any lawyer to be required to give any information relating to a client. They were on shaky ground in relation to actual knowledge (or wilful blindness) relating to a crime, particularly one which may have directly or indirectly implicated the firm in setting up a laundering scheme. But they were on much stronger foundations in relation to cash transaction reporting where there was no evidence or grounds for suspicion in relation to deposits.

And they were successful in many of their applications including gaining an order that the 1990s version of the law and regulations was an “unprecedented intrusion into the traditional solicitor-client relationship."

Following that, lawyers were removed from the regime entirely.

But now, as a member of the FATF, Canada is in a difficult position. It is a plank of the Recommendations that at least transactional lawyers be included.

Currently, a half-way house is being proposed. The Law Societies say that the Constitutional rulings in 2005 trump any attempt to bring lawyers into the net. But, they say, lawyers should not ignore the problem. The suggested compromise (if such it be) is that lawyers will have to do all the things that the law requires of banks, etc. including cash transaction recording - but not have to make reports. They must, however, retain the records. That's the idea the Law Societies are putting forward. So far, they have not made any suggestion as to how that information may be accessed by law enforcement or intelligence services.

It's not too far removed from the original position that afflicted FinTRAC in 1988. Then, due to constitutional constraints, FinTRAC received and recorded information - but could not pass it to the police unless the police specifically asked for it - and no fishing expeditions were allowed.

That somewhat ridiculous position changed after 11 September 2001. But the lawyers still held out.