A report published this month by Canada’s Department of Finance, along with the recent media coverage, suggests lawyers are at significant risk of money laundering. Nothing could be further from the truth.
The title of the report was clearly meant for maximum impact: “Assessment of Inherent Risks of Money Laundering and Terrorist Financing in Canada.” The report states, unsurprisingly, that “real estate transactions usually involve lawyers and their trust accounts.” It goes on to say that “these lawyers can knowingly or unknowingly provide legitimacy and/or obscure the source of illegally sourced funds” (my emphasis).
Well, true enough; we can. But because we can doesn’t mean we do. And somewhat myopically, the report fails to acknowledge the steps the legal profession has put in place to address the possibility.
For a number of years now, the Law Society has had in place a series of requirements and rules that replicate to a large degree the FINTRAC requirements.
Lawyers have to comply with stringent client identification and verification rules. These require more than just reporting a transaction; they demand that the lawyer determine and verify the identity of any individual or corporation before he or she can be involved in a transaction.
FINTRAC requires reporting of cash transactions over $10,000. BC lawyers are prohibited, with few exceptions, from accepting $7,500 or more in cash. If for some reason they find themselves on the receiving end of such amounts of cash, they have to return it immediately, and report to the Law Society.
Lawyers also have to keep detailed records of all transactions, and these are regularly audited by the Law Society for compliance with all our trust accounting requirements.
Money laundering is a illegal and the Law Society does not condone any lawyer assisting with money laundering. The media coverage reported that some folks knew about actual lawyers engaging in money-laundering. If any one of them has information about a lawyer assisting with money-laundering, I encourage them to bring it to the Law Society where we will act on it.
I have confidence in our regulations and in lawyers.