Canadian Lawyer

28 J U N E 2 0 1 7 w w w . C A N A D I A N L a w y e r m a g . c o m "Law societies have been at the forefront of the fight against money laundering for more than 15 years, putting in place a regime that prohibits members of the legal profession from accepting cash from clients and requires them to comply with strict know-your- client rules. In fulfilling their mandates to protect the public, law societies have implemented an anti-money-laundering regime for members of the Canadian legal profession that respects the funda- mental rights of all Canadians as affirmed by the Supreme Court of Canada." For Mercer, any new proposal from the finance department would have to avoid solicitor-client-privileged information being shared with the state — something that he says the government hasn't appeared to be willing to do. If information is shared, it leaves lawyers in a conflict, he explains. "The lawyer is placed in a position where he or she has a poten- tially conflicting obligation to the state, which could interfere with their commitment to their client's cause." H ow much money laundering is taking place in Canada depends to a large extent on how you define it. Canada's Criminal Code says a money launderer is anyone who "uses, transfers the possession of, sends or delivers to any person or place, transports, transmits, alters, disposes of or oth- erwise deals with, in any manner and by any means, any property or any proceeds of any property with intent to conceal or convert that property or those proceeds, knowing or believing that all or a part of that property or of those proceeds was obtained or derived directly or indirectly as a result of a) the commission in Canada of a designated offence or b) an act or omission anywhere that, if it had occurred in Canada, would have constituted a designated offence." The federation relies on the Criminal Code definition. However, some of its members, such as Herman Van Ommen, president of the Law Society of British Columbia, believe only trans- actions involving physical cash qualify as money laundering. "Money laundering, to me, is taking illicit cash, putting it through some accounts so you can get clean money in a bank account. It starts with cash," he says. Van Ommen says B.C.'s law society doesn't see signs of its mem- bers being involved in the practice. "We don't have evidence of lawyers being involved in money laundering. We have no evidence that it's happening once, twice or widespread." A case before the society of lawyer Donald Gurney, who is accused of allowing $25 million in offshore money to flow through his trust account without doing substantial legal work for the client, is being treated as a violation of the society's rule that you can't be involved in transactions that may assist a client in doing something wrong — not as money laundering, says Van Ommen. However, experts in tracking down money laundering say the days of gym bags full of cash being brought into a bank branch have given way to much more sophisticated techniques. The more sophisticated those techniques, the more those seek- ing to launder money need professionals such as lawyers, says Denis Meunier, former deputy director of the Financial Transactions and Reports Analysis Centre and a member of Transparency Interna- tional. "As they move up the ladder . . . they need help. Who is going to help them? Professionals. People who know how to do it." J ust how many lawyers across Canada have participated — wit- tingly or unwittingly — in money laundering in recent years is difficult to tell for sure. The Nova Scotia Barristers' Society says no lawyers have been sanctioned or charged in connection with money laundering or ter- rorist financing over the past 10 years. The Law Society of Alberta says it doesn't have "statistical information available specific to money laundering or terrorist financing offences." Ontario lumps any potential money laundering into the same category as other financial wrongdoing, making it difficult to single out. British Columbia says it knows of two cases — both involving former members of the society. One is in Canada and the second is in the United States. However, Mora Johnson, an Ottawa lawyer who specializes in anti-corruption, says you just have to look at the jurisprudence for law societies across the country in CanLII to find them. "There are quite a few lawyers disciplined for money laundering if you go down the list." A study prepared for FINTRAC in November 2015 and obtained by Canadian Lawyer under the Access to Information law analyzed 40 cases of money laundering across Canada between 2000 and 2014. Lawyers were high on the list. "The second largest profession in the sample are lawyers, repre- senting 15 per cent of the individuals charged in the cases reviewed," the authors wrote. "Based on court documentation, lawyers con- victed of money laundering were willing to exploit reporting exemptions in order to launder funds." The FINTRAC study highlights the 2005 case of Toronto lawyer Simon Rosenfeld in which wiretaps confirmed Rosenfeld used solicitor-client privilege "to enhance his money laundering services." Rosenfeld was convicted of laundering $250,000 and US$190,000. He was sentenced to three years in prison, but that was increased to five years by the Ontario Court of Appeal in 2009. "Rosenfeld's status and position as a lawyer was noted as one of the significant aggravating factors in the court's decision," said the report. Many of the cases studied involved using shell companies to "facilitate layering of funds and legitimize unexplained source of income by masking them as profits from business operations." One thing was common to all the cases studied. "Each of the money laundering operations involved at least one individual with a 'white collar' profession," according to the study. Experts say real estate transactions are a popular way to launder money, in part because of the large sums involved. A Transparency International study made public earlier this year raised questions about who is buying some of Canada's priciest real estate. "Transparency International Canada's analysis of land title records found that nearly a half of the 100 most valuable residential properties in Greater Vancouver are held through structures that hide their beneficial owners," the authors wrote. "Nearly one-third of the properties are owned through shell companies, while at least 11 per cent have a nominee listed on title."

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