Model Rules to Fight Money Laundering and Terrorist Financing
As is the case for any person in Canada, it is illegal for members of the legal profession to knowingly participate in crimes involving money laundering or terrorist financing. To ensure that legal professionals are not unwittingly used by their clients to help with these activities, all of Canada’s law societies enforce rules of conduct based on model rules developed by the Federation.
Members of the legal profession are prohibited from accepting more than $7,500 in cash to ensure that individuals involved in money laundering or terrorist financing cannot use their legal advisors’ trust accounts for illegal activities. The Federation’s Model No-Cash Rule, as revised in October 2018, is available here.
Client Identification and Verification Rules
Members of the legal profession are bound by strict “know-your-client” rules to ensure that they are providing advice only to bona fide clients whose identity can be reliably ascertained. The Federation’s Model Rule on Client Identification and Verification, as revised in October 2018, is available here.
In October 2018, the Council of the Federation also approved the introduction of a Model Trust Accounting Rule, as part of the Model Rules to Fight Money Laundering and Terrorist Financing.
In March 2015, the Supreme Court of Canada struck down certain provisions of Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act and regulations pertaining to the legal profession. That decision by the Supreme Court concluded a 14 year legal debate between the Federation and the government of Canada over application of the federal anti-money laundering and terrorist financing regime to lawyers and Quebec notaries. The regulations would have forced lawyers to collect information about their clients and their financial transactions and turn that information over to the government on demand. The Supreme Court found those requirements violated protection in the Charter against unreasonable search and seizure, and rights of security of the person.
In March 2018, the Federation appeared before the House of Commons Finance Committee and presented a brief during its statutory review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
In October 2018, the Council of the Federation approved amendments to the No Cash and Client Identification and Verification Model Rules, and approved a new Trust Accounting Model Rule. The report to Council recommending the changes is available here.