Legal Profession Fights Money Laundering With New “Know-Your-Client” Rules
OTTAWA, ONTARIO–( EMWNews – March 31, 2008) – Canada’s law societies are taking proactive steps to combat money laundering by enacting new client identification rules to ensure the legal profession is at the forefront of the fight against money laundering and terrorist financing.
“There are very few cases of members of the legal profession knowingly laundering money on behalf of criminal or terrorist organizations. These new rules will ensure that legal counsel are not duped by unscrupulous persons posing as clients,” said Michael Milani, QC, President of the Federation of Law Societies of Canada.
The new “know-your-client” rules outline the steps lawyers and Quebec notaries must take, and the records they must keep, to verify a client’s identity. These actions will help members of the legal profession determine whether a client is attempting to use them to improperly transfer funds.
“For example, if a person comes into a lawyer’s office claiming to represent an offshore corporation wanting to purchase property in Canada, but the person can’t produce basic information about the corporation, that should set off alarm bells for the lawyer”, Milani explained. “Members of the legal profession have always been under an ethical obligation to refrain from assisting clients pursuing dishonest or fraudulent activities. The new ‘know-your-client’ rules are just one more way of assisting lawyers and Quebec notaries in meeting that obligation and ensuring they do not unwittingly assist clients in committing unlawful acts.”
The new rules codify the steps prudent legal counsel would take in the normal course to verify a new client’s identity. Each provincial and territorial law society is committed to enacting the new rules as soon as possible to ensure a national standard.
“Canada’s law societies have a statutory duty to regulate the legal profession in the public interest,” Milani said. “The new rules mean each law society will have another effective, practical and enforceable tool for ensuring members of the legal profession remain vigilant in the fight against money laundering.”
This is the second time in recent years that the legal profession has taken proactive steps to combat money laundering. In 2005, Canada’s law societies enacted rules prohibiting lawyers and Quebec notaries from accepting $7,500 or more in cash from a client. Those rules are more stringent than the federal government’s anti-money laundering regulations, and have been recognized by the federal government as an important weapon in the fight against money laundering and terrorist financing.
The Federation of Law Societies of Canada is the national coordinating body of the 14 provincial and territorial governing bodies of the legal profession in Canada. Our member law societies are charged with the responsibility of governing Canada’s 95,000 lawyers and 3,500 notaries in Quebec in the public interest. The Federation is a leading voice on a wide range of issues of national and international importance involving justice and regulatory matters critical to the protection of the public.
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