Gov’t Act Illegal, Court Rules

The Supreme Court today struck down yet another Act of Parliament, a 2001 bill compelling lawyers to submit clients’ identities in the name of anti-terrorism. Justices ruled unanimously that cabinet went too far in treating attorneys as agents of the Government of Canada.

“The regime authorizes sweeping law office searches which inherently risk breaching solicitor-client privilege,” wrote Justice Thomas Cromwell for the Court. “It does so in a criminal law setting and for criminal law purposes.”

Under the Proceeds Of Crime & Terrorist Financing Act all lawyers were required to keep records of clients’ ID and submit to federal audits under threat of $500,000 fines. The law also attempted to track cash transactions of $10,000 or more by banks, realtors, casinos, currency exchange firms, diamond dealers and others.

The Federation of Law Societies spent over a decade fighting the law as unconstitutional. Supreme Court justices agreed the Act was illegal. “There is overwhelming evidence of a strong and widespread consensus concerning the fundamental importance in democratic states of protection against state interference with the lawyer’s commitment to his or her client’s cause,” Justice Cromwell wrote.

The Department of Justice spent more than $3 million defending the Act, according to accounts obtained by Blacklock’s. Canada has some 27,000 law firms.

The Act, which predated 9/11 anti-terror regulations, prompted the Federation of Law Societies to publish its own “know your client” guidelines that restricted lawyers from accepting large cash payments, and other measures. “The disappointment is we had in the law societies really stepped up to the plate,” John Hunter, past federation president, said in an earlier interview.

“The government did not have to go to litigation,” Hunter said. “We thought we were working to similar ends.” The British Columbia Supreme Court ruled in 2012 the federal regulations were unconstitutional, and treated lawyers as information gatherers for federal agents.

Lawyers remain at “real risk for money laundering”, according to a confidential government report obtained through Access To Information January 30. The study by the Financial Transactions & Reports Analysis Centre complained that Canadian attorneys “are sought after by those desiring to launder funds” specifically because of client-solicitor privilege.

“International sector exports and investigators shared that they were aware of a number of cases wherein legal services had been used, including the use of a trust account, to assist money laundering operations,” said the report Money Laundering & Terrorist Financing Vulnerability Assessments, authored by Grant Thornton LLP for the federal government.

By Dale Smith

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