Money Laundering Legislation

EP Update - March 20, 2002

In the summer of 2000 the Federal Government introduced new legislation to strengthen Canada’s existing anti-money laundering regime. The Proceeds of Crime (Money Laundering) Act places onerous obligations on most practicing lawyers and law office staff.

Compliance with some parts of the legislation began in the fall of 2001. What the government calls “suspicious transactions” must now be reported to a new government agency. One problematic aspect of the legislation is that it requires lawyers to report to the government certain information about their clients without informing their clients. This conflicts with a lawyers duty to keep all such client information confidential.

In British Columbia, the Law Society has been successful in delaying the requirement that lawyers have to report such information. While an attempt was made to have this decision binding across Canada, the Justice Minister declined to do so. As a result, lawyers in Ontario must meet the reporting requirements.

Initially, a lawyer must decide whether any transaction involving money is a “suspicious transaction”. That is, a transaction where the lawyer feels there are reasonable grounds to suspect it is related to the commission of a money laundering offence. Needless to say, there is a degree of subjective reasoning in such a decision.

The Law Society of Upper Canada will also be challenging this legislation in court and through this web site we will keep you updated on the status of this legislation.