Proceeds of Crime legislation update
B.C. lawyers exempt from new money laundering reporting requirements
As earlier reported to the profession, Madam Justice Allan of the Supreme Court of British Columbia on November 20 made an order granting lawyers interlocutory relief from the requirement to comply with reporting requirements under the new federal money-laundering legislation: Federation of Law Societies of Canada v. Attorney General of Canada and The Law Society of British Columbia v. Attorney General of Canada, 2001 BCSC 1593.
The result of this decision is that, until further order of the court, B.C. lawyers are exempt from the obligation to make any reports to FINTRAC under the Proceeds of Crime (Money Laundering) Act. [Under Bill C-36, the PCMLA will be renamed the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.]
Lawyers should check the Law Society website for updates, monitor future court proceedings and remain familiar with the Act and Regulations. The federal government is appealing the interlocutory order; the appeal hearing is scheduled for January 18, 2002.
Justice Minister takes position that B.C. order applies only to B.C. lawyers
The Federal Justice Minister, Anne McLellan, has taken the position that the federal government will not recognize the B.C. Supreme Court's order that exempts lawyers from the application of s. 5 of the Regulations to the Proceeds of Crime Act, as applying to all lawyers across Canada. The Justice Minister's current position is that the order only applies within B.C., not beyond. As a result, court proceedings have been commenced or are contemplated in several other Canadian jurisdictions. The first of these applications was heard in Alberta.
Alberta Court of Queen's Bench makes interlocutory order - lawyers in Alberta must send sealed reports to the Law Society of Alberta
On December 6, 2001, the Federation of Law Societies brought an application on an expedited basis before the Alberta Court of Queen's Bench. The Federation sought an order of the Court recognizing the B.C. judgment pursuant to the doctrine of res judicata and/or judicial comity.
Watson J. of the Court of Queen's Bench of Alberta made the following interlocutory orders:
- The obligations of lawyers in Alberta concerning suspicious transactions are not stayed.
- However, lawyers will not provide their suspicious transaction reports to FINTRAC. Instead, they will place them in sealed envelopes, marked only with their names and file numbers, to the Law Society of Alberta for storage.
- The Law Society of Alberta will stamp the envelopes as to date of receipt.
- The documents are not subject to search warrant unless ordered by the court.
- The order is to be reviewed at the time of the hearing on the merits of the application.
For updates on current requirements in Alberta, see "What's New" at www.lawsocietyalberta.com.