Canadian Lawyer

www.canadianlawyermag.com 59 of Crime (Money Laundering) and Terrorist Financing Act pertaining to the legal profes- sion. The SCC decision ended a 14-year legal battle between the federation and the federal government over application of this regime to lawyers and Quebec notaries. But despite the hard-won exemption, with a push toward more transparency on these issues both domestically and internationally, "there was a response from the profession rec- ognizing this concern should be addressed," says MacFadyen. In March 2018, the federation presented a brief to the House of Commons Finance Committee following 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 cash transactions rule, the trust accounting rule and client identifi- cation and verification rules. Working with the government of Canada, the federation created the Anti-Money Laundering and Terrorist Financing Working Group in June of last year with a mandate of examining best practices for the profession. Last February, it released a Guidance to the Legal Profession with suggested model rules summarized. "This is on our radar screen," says MacFadyen, noting that the Nova Scotia Barristers' Society is expected to adopt the model rules this year. But, like how B.C. lawyers feel about the LOTA requirements, imposing an obligation on the law firms to drill through complicated corporate structures to the individuals who actually control it could be "quite burden- some in some situations," he says. The rules themselves talk about using judgment, MacFadyen says, so "it's not clear how the different law firms and the law soci- ety are going to actually enact this and what their expectation actually is. "They still talk about making efforts to identify who owns even broadly held com- panies — I think that's entirely unrealistic," MacFadyen says. "I struggle to see how any- body would actually do that." The changes to the rules by the federation are part of a process of law societies across the country adopting tighter rules, Wilson says, noting that B.C. adopted the trusts and cash funds limits last year. In other jurisdictions — such as England or the United States — lawyers are subject to the money-laundering rules, and it causes "a lot of frustration within police organizations that lawyers are exempt and that lawyers are somehow shielding their clients from mon- ey-laundering detection," Wilson adds. He predicts "the day will come" where either the provinces adopt laws that say law- yers are subject to money-laundering rules or, more likely, law societies will eventually need to create a similar registry that may be confi- dential and protected — only accessible after a court order, for example — if the profession wants to maintain self-regulation. "If the provinces or the feds get concerned enough about this issue, I could see them say- ing if you don't do something about this issue then we're going to do it," Wilson says. "It may not be taking over regulation of the law society, but they may say they're amending the Legal Profession Act and you must now maintain this registry." He says he's "a big fan" of the federation leading the charge because then the country would have consistent practices and rules across all provinces, and "that makes life a lit- tle easier." "Ninety-five per cent of the world is legit, and they're suffering because they have to jump through hoops to deal with the five per cent," he says. "But, at the end of the day, I think that's a good thing — it's just a compli- cated thing." CANADA (ATTORNEY GENERAL) V. FEDERATION OF LAW SOCIETIES OF CANADA 2000: Parliament adopted the Proceeds of Crime (Money Laundering) Act The Federation of Law Societies of Canada challenged the provisions affecting lawyers 2001-2002: Courts in numerous provinces side with the federation 2011: B.C. Supreme Court sides with federation 2013: B.C. Court of Appeal sides with federation 2015: Supreme Court of Canada unanimously ruled the legislation applicable to lawyers is unconstitutional "Imposing on the law firms an obligation to drill through complicated corporate structures down to the individuals that actually control it could be quite burdensome in some situations." Fraser MacFadyen, Stewart McKelvey

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