Anti-Money Laundering
Law societies play a critical role in combating money laundering and terrorist financing within the legal profession. As gatekeepers of the financial and legal systems, lawyers may be targeted by individuals or entities seeking to exploit legal services to legitimize illicit funds or facilitate criminal activities.
Rules
In 2020, The LSNT adopted new rules for client identification and verification, trust accounting and cash transactions to ensure that legal professionals in Canada are not facilitating money laundering and terrorist financing.
Members should be familiar with Rules 95 through 135, which contain these provisions.
The Law Society circulated a memo to members about these new Rules, you can find it here.
The Law Society also provided members with a document explaining in more detail how to satisfy the “dual process” client verification requirement. You can access that here.
Client ID and Verification FAQ (Federation of Law Societies of Canada)
Spot Audit Review Program
The Law Society of the Northwest Territories implemented a Spot Audit Review Program to ensure lawyers in private practice comply with trust accounting and financial record-keeping requirements. These random audits help identify potential risks related to anti-money laundering compliance and ensure adherence to Law Society Rules. Lawyers must provide full access to their records, and any deficiencies found may result in further review, recommendations, or disciplinary action. This program reinforces financial accountability and professional integrity within the legal profession.
Resources
2024 Anti-Money Laundering Measures Webinar from the Law Society of British Columbia
Anti-Money Laundering Resources from the Law Society of Alberta
Online Learning Program, “Anti-Money Laundering and Terrorist Financing in the Canadian Legal Profession”
The Federation of Law Societies of Canada offers an online learning program designed to help legal professionals understand their anti-money laundering and terrorist financing obligations. This program provides practical guidance on compliance with the Model Rules and best practices for mitigating risks.
The Federation of Law Societies of Canada has also developed resources to help members of the legal profession understand the risks that may arise in their legal practices and to understand their responsibilities when engaged in financial transactions on behalf of their clients.
Federation of Law Societies of Canada
The Federation of Law Societies of Canada (FLSC) plays a vital role in protecting the integrity of the legal profession by addressing money laundering and terrorist financing.
Partnering with the Federal Government
Established in 2019, a joint working group comprising representatives from the Federation of Law Societies of Canada and the Government of Canada serves as a platform for addressing money laundering and terrorist financing concerns within the legal profession. This partnership enhances cooperation and improves information sharing between Canada’s law societies and the federal government to better identify and mitigate financial crime risks.
Supreme Court of Canada Ruling on AML Regulations
In March 2015, the Supreme Court of Canada (SCC) ruled that provisions of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) violated the Charter of Rights and Freedoms. The Court found that requiring lawyers to collect unnecessary client information, allowing broad law office searches, and failing to protect solicitor-client privilege undermined fundamental justice. This decision reinforced the legal profession’s independence and the duty of lawyers to their clients.
