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The fact that lawyers aren’t required to report their clients’ information pursuant to the Proceeds of Crime (Money-Laundering) and Terrorist Financing Act isn’t a privilege granted to lawyers, but rather a right of Canadian citizens. The Supreme Court of Canada determined that it was a principle of fundamental justice that any citizen is entitled to consult a lawyer whose sole duty is to the client and not to both the client and the government. Requiring a lawyer to make information about client financial transactions available to the government would compel the lawyer to serve two masters and would undermine client confidentiality and privilege.

Here in B.C., the Law Society’s Code of Professional Conduct for B.C. specifies that “a lawyer must not engage in any activity that the lawyer knows or ought to know assists in or encourages any dishonesty, crime or fraud.” A note accompanying the rule advises lawyers that they must be alert to and avoid unwittingly becoming involved in criminal activities such as money-laundering. In addition, lawyers in B.C. are subject to a “no-cash” rule that prohibits lawyers, except in limited circumstances, from accepting $7,500 or more in cash from a client. Client identification and verification rules require that lawyers know exactly who they’re dealing with when they are asked to make a financial transaction on behalf of a client.

To ensure compliance with the rules, every lawyer or law firm with trust accounts must file an annual trust report specifying, among other things, whether they received an aggregate in cash of $7,500 or more from one client or transaction. The $7,500 limit imposed on lawyers is more stringent than the $10,000 limit imposed on financial institutions by the federal anti-money-laundering legislation and monitored by the Financial Transactions and Reports Analysis Centre of Canada. Lawyers in B.C. are also subject to periodic compliance audits. If an audit reveals evidence of a potential breach of either the no-cash rule or the client-identification rules, the matter can be referred for investigation.