Anti-money laundering measures in BC

As the professional regulator of lawyers in the province, the Law Society’s obligation is to ensure that lawyers do not facilitate money laundering or any other illegal activities.

The Law Society has a duty to uphold and protect the public interest in the administration of justice. In carrying out our obligation to protect the public interest, the Law Society has a mandate and vital role in working to combat money laundering.

As the professional regulator of lawyers in the province, our obligation is to ensure that lawyers do not facilitate money laundering or any other illegal activities. The Law Society has been developing and implementing enhanced rules to address emerging risks of criminals trying to take advantage of legal services in their effort to launder money. We introduced regular compliance audits for every law firm in the province. Education about money laundering and risk has been added to our professional legal training course that all new lawyers are required to take for admission to the practice of law. All of these build upon the long-standing rules requiring honesty and integrity, and for lawyers to uphold and protect the rule of law.

British Columbians expect the legal profession to be held accountable to stringent standards of conduct. In 2005, the Law Society became the first in Canada to adopt a rule that restricted a lawyer’s ability to accept cash. In the years that followed, the Law Society has disciplined several lawyers for breaches of the “cash rule.”

In proceeding with our work, we are encouraged by Dr. Peter German’s description of the Law Society as a “best practice among Canadian law societies with respect to AML initiatives,” and his recognition that we take the issue seriously and are willing to work on solutions.

Here is time-line of some of the key measures that the Law Society has developed to combat money laundering:

• Pre-2001 – General obligation under the Legal Profession Act and Law Society Rules for lawyers to act honestly, with integrity and to uphold the rule of law.
• 2001 – The Law Society takes a prominent role in a national working group for the development of model regulations to fight money laundering
• 2004 – The Law Society of British Columbia becomes the first legal regulator in Canada to introduce a rule limiting the amount a lawyer may receive in cash from any one client
• 2004 – An anti-money laundering education component is added to the Professional Legal Training Course
• 2006 – Introduction of the trust assurance program for auditing compliance with the rules covering trust accounts and other client property
• 2008 – Donald Andrew Lyons disciplined for accepting cash in amounts exceeding $7,500, contrary to the Law Society’s Rules.
• 2008 – Client identification and verification rules are introduced
• 2013 – Code of Professional Conduct for BC comes into effect, and extends the requirement from its predecessor Professional Conduct Handbook 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” to include when acting for companies and organizations.
• 2016 – Law Society participates in new national working group to strengthen regulatory rules to fight money laundering
• 2017 – Donald Franklin Gurney disciplined for using his trust account to receive and disburse over $25 million on behalf of a client without making reasonable inquiries about the funds and without providing any substantial legal services
• 2018 – The Law Society adopts a plan to re-audit law firms in high-risk areas and to conduct compliance audits of law firms that primarily practise in the areas of real estate and wills and estates every four years
• 2019 – New Rule 3-58.1 directs that trust accounts may only be used for legal services
• 2019 – The Benchers adopt substantial changes to the client ID and verification rules, which came into effect on January 1, 2020
• 2019 – The Benchers approve rule change in principle to ensure funds related to fiduciary property are not deposited into the trust account
• 2020 – Law Society participates in Cullen Commission