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Show me the (laundered) money

Our June issue of Canadian Lawyer has a money theme. We publish our annual Legal Fees Survey in this issue, which we hope will help lawyers and law firms better understand how their fees compare to their competition. Often, lawyers make these business decisions based on little to no data, and our survey is meant to help address that.

But we also include other articles related to money, and a theme running through a number of these is the challenge of making rules with a lack of data.

Take money laundering. The federal government brought in a set of rules to address this problem a few years ago, but tracking dirty money is proving difficult.

The real estate market is one area where laundering often occurs. As millions of dollars come into the housing market, tracking the source of the money is very difficult. Governments are finding it hard to track even legitimate foreign purchasers when making rules to cool the housing market, but when the money is laundered the murkiness is by design.

And one of the biggest impediments in tracking the flow, according to many critics of our current regime, is lawyers. “Lawyers, they’re the biggest problem with money laundering in this country, as far as I’m concerned,” Kim Marsh, the former head of the RCMP’s International Organized Crime Investigation Unit, told us. Marsh is based in Vancouver and saw the challenges of tracking money laundering in the real estate market there.

Law societies and other leaders in the legal profession say there is a very good reason for the lack of data: solicitor-client privilege. While law enforcement wants more information to be able to track money laundering, the Supreme Court ruled in 2015 that making lawyers subject to Canada’s money-laundering rules risks violating this fundamental right.

But critics such as Marsh say that law societies are doing a lousy job and Canada is under increasing international pressure to close the lawyer “loophole.” As our Ottawa correspondent reports, the federal government is listening to these critics and working on updating the rules soon.

Representatives from the law societies say that the systems that are now in place are doing the job and there is no evidence that lawyers are part of the problem. “We don’t have evidence of lawyers being involved in money laundering. We have no evidence that it’s happening once, twice or widespread,” Herman Van Ommen, president of the Law Society of British Columbia, told us.

Essentially, it is all about the facts. How many lawyers are helping to launder money and how are they doing it? It is possible that law societies are preventing this in many cases, but the government is not convinced. It needs more data.

Law societies want lawyers to retain control, but they need to make a better case about why. As critics of our current regime might put it, show me the money.