Fighting Money Laundering and Terrorist Financing

The Federation leads efforts to prevent money laundering and terrorist financing in the practice of law. Model Rules developed by the Federation and implemented by Canada’s law societies, ensure members of the legal profession are bound by comprehensive “know-your-client” requirements.  These rules, updated in 2018, also restrict the use of professional trust accounts and limit the amount of cash legal professionals can accept. 

The Federation 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. Those resources include the Federation’s Online Learning Program,  “Anti-Money Laundering and Terrorist Financing in the Canadian Legal Profession”.

Respecting Constitutional Principles

The Model Rules developed by the Federation ensure appropriate regulation of money laundering and terrorist financing risks while respecting constitutional principles recognized by the Supreme Court of Canada (SCC). In March 2015, after a 14-year legal battle between the Federal government and the Federation, the SCC recognized that the provisions in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) requiring legal counsel to collect and retain information not required for client representation, expansive powers to search law offices, and inadequate protection for solicitor-client privilege violated provisions of the Canadian Charter of Rights and Freedoms and undermined the ability of legal professionals to comply with their duty of commitment to the client’s cause, a principle of fundamental justice.

Partnering with the Federal Government 

A joint working group of representatives of the Federation and the Government of Canada, established in 2019, provides a forum for collaboration on issues related to money laundering and terrorist financing that may arise in the practice of law. The partnership also strengthens the sharing of information between Canada’s law societies and the federal government to mitigate risks of money laundering and terrorist financing.

Guidance Publications for Members of the Profession

• FAQs on the Client Identification and Verification Rules (March 2023)
• Guidance for the Legal Profession: Your Professional Responsibility to Avoid Facilitating or Participating in Money Laundering and Terrorist Financing (March 2023)
• Guidance on Politically Exposed Persons (December 2023)
• Source of Funds Guidance (December 2023)
• Guidance on Monitoring Obligations (July 2020)
• Guidance on Using an Agent (July 2020)
• Risk Assessment and Compliance (December 2023)
• Quick Reference Guide on Potential Risks (Red Flags) (December 2023)
• Risk Assessment Case Studies for the Legal Profession (February 2020)
• Risk Advisories for the Legal Profession: Advisories to Address the Risks of Money Laundering and Terrorist Financing (December 2019)

Model Rules

• Cash Transactions Rule (October 2018)
• Client Identification and Verification Rule (March 2023)
• Trust Accounting Rule (October 2018)
• Final Report on Model Rules (October 2018)

Related Submissions, Decisions and Communications

• Submission to Finance Canada (July 31, 2023)
• Submission to Cullen Commission (June 2020)
• Department of Finance news release re: joint working group (June 2019)
• The Federation’s news release re: joint working group (June 2019)
• Federation backgrounder on its activities to combat money-laundering and terrorist financing (June 2019)
• Submission to the Department of Finance in response to the Department of Finance White Paper in support of Parliament’s five-year review of the Proceeds of Crime (Money-Laundering) and Terrorist Financing Act
• Federation Submission for the 2018 Statutory Review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (March 2018)
• Supreme Court Decision (March 2015)