Ottawa may have promised reforms in the federal budget, but if it really wants to get serious, it needs to rein in lawyers
Years of neglect by the federal government has created gigantic money laundering networks in Canada
Ottawa’s budget earmarked about $200 million over the next five years to address Canada’s massive money laundering problem.
This was promising news, but follows years of neglect resulting in the creation of gigantic laundering networks in Canada, the growth of criminal organizations, increased drug trafficking, housing unaffordability, and few prosecutions.
The budget came on the heels of a critical report by the U.S. State Department in March stating Canada is a global problem and vulnerable to major laundering operations, along with nations such as Afghanistan, the British Virgin Islands, China, Macau and Colombia.
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Especially undefended, it stated, are casinos, real estate, money services businesses, currency exchanges, wire exchanges, offshore corporations, legal “funnel accounts,” and hawala transactions (international transfers between immigrants through agents in South Asia, the Arab world, and parts of Africa, Europe, and the Americas).
Ottawa’s new funding will create money-laundering task forces staffed by police and prosecutors as well as CRA teams to audit real estate deals. Funds will also be used to develop expertise in trade-based money laundering, and to ensure support for financial intelligence gathering and sharing. The Liberals are also promising to amend the criminal code to lower the prosecution threshold concerning laundering.
Not only must implementation of all these reforms be rapid, but Ottawa must also rein in the legal profession.
“Lawyers, they’re the biggest problem with money laundering in this country, as far as I’m concerned,” said Kim Marsh in an interview in 2017. He is the former head of the RCMP’s International Crime Unit and now a security consultant.
In 2015, the Supreme Court of Canada made a huge mistake when it constitutionally exempted lawyers from a newly minted Proceeds of Crime and Terrorist Financing Act and Regulation (the ‘Proceeds of Crime Regime’). This followed arguments by the Federation of Law Societies of Canada that laws violated solicitor-client privilege and that the legal profession alone had the responsibility for policing itself.
This puts lawyers above the law compared to other self-regulating professionals. Accountants, doctors, nurses, social workers or teachers are never exempt under the law from reporting abuse or criminality by their clients. This is foolishness.
Besides, the law societies are riven with conflicts and have done a lousy job. For instance, it took five years for the B.C. Law Society to suspend a lawyer for six months after he allowed $25 million in suspicious transactions to flow through his trust account.