Federation launches anti-money laundering education program for legal profession
The Federation of Law Societies of Canada is pleased to announce the launch of its online learning program, “Anti-Money Laundering and Terrorist Financing in the Canadian Legal Profession”.
Developed as part of the long-standing commitment of the Federation and its members, Canada’s legal regulators, to the fight against money laundering and the financing of terrorism, the program is designed to enhance the ability of legal professionals to understand and respond appropriately to money laundering and terrorist financing risks.
“The Federation and the law societies take seriously their responsibility to address money laundering and terrorist financing risks faced by legal professions and have demonstrated their commitment in this area by developing and implementing robust anti-money laundering regulation,” said Federation President Jill Perry.
“Providing comprehensive educational materials for legal professionals is another key element of our anti-money laundering work. This online program is an important addition to the resources available to legal professionals.”
The program consists of five interactive modules. Together, the modules provide an overview of the problem of money laundering and terrorist financing, the risks that may be faced by legal professionals, key due diligence obligations under law society anti-money laundering and terrorist financing rules and regulations, proper use of trust accounts, and restrictions on cash transactions.
This educational program is part of a suite of initiatives undertaken by the Federation over the past 20 years to address the risks of money laundering and terrorist financing that can arise in the practice of law. These initiatives include the development of model rules limiting the ability of legal professionals to accept cash, imposing extensive client identification and verification obligations, and limiting the use of professional trust accounts; providing guidance to law societies on the enforcement of those rules; providing guidance and educational materials to the profession; and engaging with the Department of Finance to ensure that Canada’s anti-money laundering regime is strong.
The program is available on the Federation’s public website.
The Federation is the national association of the 14 regulators of the legal profession in Canada. Our member law societies are mandated by legislation in each province and territory with the responsibility for regulating more than 141,000 lawyers, 3,850 notaries in Quebec, and Ontario’s 10,600 licensed paralegals in the public interest. An important role of the Federation is to express the views of the law societies on national and international issues relating to the administration of justice and the rule of law.
Federation challenges Income Tax Act provisions
The Federation of Law Societies of Canada is challenging provisions of the Income Tax Act (the Act) that require legal counsel to report confidential information about their client’s activities to the Canada Revenue Agency (CRA). The provisions infringe on rights under the Canadian Charter of Rights and Freedoms and principles of fundamental justice that exist for the benefit of the people of Canada.
“Canadians place a high value on their constitutional protections, including those that ensure that legal advisors are not required by the State to choose between their personal interests and their legal and ethical duties toward their clients”, Federation President Jill Perry said.
The Federation filed an application in the British Columbia Supreme Court on September 11, 2023, challenging the constitutionality of the application of recent amendments to the mandatory reporting obligations in the Act to members of the legal profession. The application seeks to exempt legal counsel from the obligation of taxpayers, promoters, and advisors, including legal counsel, to provide details to the CRA of transactions that may constitute tax avoidance.
The Federation and its 14 law society members, who collectively regulate Canada’s 141,000 lawyers, 3,825 Quebec notaries, and Ontario’s 10,600 paralegals in the public interest, support the government’s attempts to crack down on tax avoidance activities, but the means chosen must respect important legal and constitutional principles.
The case raises many of the same issues involved in the Federation’s successful challenge to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada (Attorney General) v. Federation of Law Societies of Canada, 2015 SCC). Requiring legal counsel to report to a government agency on their clients’ activities causes an irreconcilable conflict with the legal and ethical duties lawyers and other legal professionals owe to their clients. Backed by penalties that include large fines and the possibility of imprisonment for noncompliance, the legislation forces legal counsel to choose between their own interests and those of their clients. This conflict undermines the duty of commitment to the client’s cause, a duty found by the Supreme Court of Canada in the Federation’s 2015 case to be a principle of fundamental justice. As a result, the legislation violates section 7 of the Charter. The obligation for legal counsel to report confidential information to the CRA also violates the protection from unreasonable search and seizure in section 8 of the Charter.
The Federation is seeking an injunction exempting legal counsel from the challenged provisions of the Act pending a hearing of its application.
A Backgrounder with additional information on the Federation’s constitutional challenge is available here.