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REGIONAL WRAP-UP ATLANTIC RepoRt dRives new appRoach foR nova scotia auto insuRance Board is currently determining the cost implications of recommendations in a comprehensive review of the sector commissioned by the Department of Finance. Recommendations in the 70-page N report — built around consumers and recognizing the need for fairness, cost competitiveness, and effective commu- nication — will be unfamiliar terri- tory for many people in the province, says Geoffrey Machum, a partner with Stewart McKelvey in Halifax. "While some of these principles are recog- nized nationally in other jurisdictions, letters to the editor O P I N I O N BY PHILIP SLAYTON LEGAL ETHICS A misunderstanding Philip Slayton's article about the legal dispute between Canada's law lege does not always prevail government once again at loggerheads over protecting solicitor-client dodgy financial transactions. ver again. government is ing to force the to comply with oney laundering rules. Canada's ck, arguing that ge, the profes- e itself, ethical ything else they the way. We've in 2000, when oceeds of Crime and Terrorist ns under the act nancial institu- nd others who picious financial al Transactions ntre of Canada t nuts. Several n off to court, ns forced law- with their con- to a client and courts across the country accepted these arguments and exempted the legal profession from the reporting requirements. In 2003, the fed- eral government reluctantly removed law- yers from the list of those who must report suspicious cash transactions, but warned it was going to try and figure out some other way of roping lawyers in. Hoping to head off further action by the government, all law societies adopted a model rule developed by the Federation of Law Societies of Canada. This rule pro- hibited lawyers from accepting more than $7,500 in cash, subject to limited excep- tions, and required them to adopt more stringent record keeping of cash receipts. Meanwhile, there was pressure on the government to do something. In 2004, the auditor general said the exemption for lawyers was a "serious gap" and allowed crooks to bypass a key component of the anti-money-laundering system. An aca- demic study that year reported that law- yers had played a role in half the major money-laundering and proceeds-of-crime cases solved by the RCMP from 1993 to 1998. A 2005 RCMP report said lawyers A N Lawye rma g . com 5/16/11 4:04:44 PM are left "bearing the brunt of increasingly desperate criminals with vast sums of dirty drug cash needing conversion into some- thing that can be spent without arousing suspicion." In 2006, the Senate banking, trade, and commerce committee recom- mended the government monitor lawyers for suspicious transactions. The Financial Action Task Force, an international body combating money laundering and terrorist financing, expressed dissatisfaction with Canadian efforts. In 2007, the government proposed new regulations, which required lawyers to keep information that verified their clients' identities and allowed FINTRAC to audit lawyers' files to ensure compliance. There were lengthy consultations with the legal profession that initially went well. But, after considerable back and forth, the govern- ment and the profession could not agree. Now the government apparently intends to go back to court to try and reverse the court decisions of 10 years ago. The battle lines have been drawn again, pretty much in the same place as before. What a dismal story! Two stubborn societies and the federal government over money laundering rules ("Privilege does not always prevail," June 2011) is premised on a basic misunderstanding of the issues before the courts. Slayton suggests the parties are fighting over whether lawyers should secretly report "suspicious financial transactions" involving their clients to the gov- ernment. In fact, that dispute was resolved when the government amended the Proceeds of Crime (Money Laundering) and Terrorist Financing Act in 2006 to exempt lawyers and Quebec notaries from the reporting regime, after Canada's law societies passed rules pre- venting the legal profession from accepting more than $7,500 in cash from their clients. The current proceedings relate to the federal government's attempt to regulate how members of the legal profession identify their clients. Since 2010, Canada's law societies have passed comprehensive client identification rules to ensure lawyers are not used as dupes in money laundering schemes. Unfortunately, the government wants to impose its rules on the legal profession in a way that would undermine the inde- pendence of the bar and enable authorities to inspect law firm files in violation of solicitor-client privilege. The Federation of Law Societies of Canada objects to this regime and has recently argued the matter before the British Columbia Supreme Court. The issues have nothing to do with reporting suspicious transactions. When they consult a legal adviser, Canadians expect their com- munications will be held in strict confidence. At the same time, the legal profession must not be used to facilitate money laundering activities. Canada's law societies are at the forefront of promoting these two objectives by adopting rules which protect the public and put clients first, while respecting basic constitutional values. — RONALD J. MACDONALD President, Federation of Law Societies of Canada Responding to disaster We would like to take an opportunity to perhaps clarify the Canadian Bar Association's response to the Slave Lake, Alta. disaster. In the July 2011 article "Slave Lake lawyers' lives changed forever," Catherine Twinn mentioned we have offered a person to support the housing fundraising effort. While we are currently not involved with the hous- ing effort, we have joined forces with several other legal agencies in the province to provide free legal information to those affected by the wildfires. For the first time in Alberta's history, key players in the provision of access to justice in Alberta have responded to a natural disaster by partnering to provide direct relief services to the victims of the Slave Lake wildfire. The Canadian Bar Association-Alberta, the Law Society of Alberta, Legal Aid Alberta, Pro Bono Law Alberta, and the Alberta Law- yers Assistance Society have formed a partnership to respond to the emerging legal needs of Slave Lake residents. — MELINDA LUNDY Manager of communications, Canadian Bar Association-Alberta welcomes letters to the editor but reservers the right to edit for space, taste, and libel considerations. Please include your full contact information in correspondence. Send your letters to: gail.cohen@thomsonreuters.com www.CANADIAN Lawyermag.com A U GUST 2011 7 ova Scotia is charting a new course in auto insurance. The provincial Utility and Review it will be new to Nova Scotia drivers. It represents a gravitational move to the Alberta model of diagnosing soft-tissue injuries. This would be a very familiar blueprint in Alberta." In his report, Ron L'Esperance, for- mer deputy minister of the Department of Environment and Labour, noted: "One of the key findings in the Auto- mobile Insurance Review is that rates in Nova Scotia have been stable and, in fact, declining over the past number of years. On a comparative basis, automobile in- surance rates in Nova Scotia are similar to other provinces in the Atlantic Region and, in fact, more favourable than many other jurisdictions across the country. "Unlike the situation in 2003," he said, "this stability allows the govern- ment of Nova Scotia to take measures to improve the automobile insurance system in Nova Scotia in a thought- ful manner without being required to respond to an immediate crisis." One area explored in the report is Section B accident benefits. "Nova Scotia has been one of the lowest C ontinued on pa g e 8 pr o bono C anadian L a wy er DARCY MUENCHRATH