Why We Have These Requirements

In the aftermath of the September 11, 2001, terrorist attacks, the Canadian government amended legislation to widen its powers regarding money laundering and financing terrorist organizations. This legislation, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the PCMLTFA), requires the reporting of certain types of transactions to the Financial Transaction and Reports Analysis Centre of Canada (FINTRAC).

The Federation of Law Societies of Canada, along with others, challenged the constitutionality of the PCMLTFA, alleging that its application to the legal profession abrogated solicitor-client privilege. In 2015, the Supreme Court of Canada recognized that certain provisions of the PCMLTFA violated the Canadian Charter of Rights and Freedoms and undermined lawyers’ ability to comply with their duty of commitment to the client’s cause. Accordingly, the Court read down those provisions to exclude legal counsel and law firms from their operation. See Attorney General Canada v Federation of Law Societies of Canada, 2015 SCC 7.

The Federation’s Model Rules on Client Identification and Verification, developed in response to the PCMLTFA and updated in 2018, reflect the principles underlying the federal legislation while protecting solicitor-client privilege. The Law Society of Saskatchewan adopted the Model Rules, which include a “no cash” provision as well as Client Identification and Verification Rules.

Want more information?
See Fighting Money Laundering and Terrorist Financing on the Federation of Law Societies of Canada website.