One recent case that has gotten some attention in Canadian law circles is Canada (Attorney General) v. Federation of Law Societies of Canada. The case concerned legislation surrounding anti-money laundering and anti-financing legislation also collectively referred to as the Proceeds of Crime (Money Laundering) and Terrorist Financing Actor simply “The Regime.”According to the case documents, it presented:

“Whether Canada’s anti-money laundering and anti-terrorist financing legislation, as it applies to legal profession, infringes right to be free of unreasonable searches and seizures—Whether legislation infringes right not to be deprived of liberty otherwise than in accordance with principles of fundamental justice – If so, whether infringements are justifiable by multiple sections of the Canadian Charter of Rights and Freedoms and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.”

The Regime compels and permits lawyers and other professionals like the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to collect information through warrantless searches of offices and computers belonging to people or entities that are subject to The Regime. It also has penal consequences for those who do not comply with their requests.

The Supreme Court of Canada (SCC) now regards the section of The Regime that is relative to lawyers as unlawful and unconstitutional.

Case Background

The Proceeds of Crime (Money Laundering) and Terrorist Financing Actwas enacted in 2000, and amended in 2008. It was the basis for the funding regime concerned with anti-money laundering and anti-terrorism. The Act applies to financial institutions and intermediaries like banks and trust companies.

In 2011, the Federal of Law Societies of Canada (FLSC) filed a petition in British Columbia challenging the constitutionality of multiple sections of The Regime. The Chambers Judge found that The Regime abused the rights of lawyers and their clients,which was not in accordance with the solicitor-client relationship pursuant of Section 7 of the Charter.

The British Columbia Court of Appeal (BCCA) was in agreeance and the Government of Canada appealed. However, the SSC held up the decision of the (BCCA) and dismissed the appeal.

Brief Overview of Sections

Section 8 of the Charter – provides that “Everyone has the right to be secure against unreasonable search or seizure.”

Canada submitted that the search powers enabled by The Regime were not criminal and the lack of warrants was not odd or unreasonable.

However, the Majority rejected this notion, and found that the procedures authorized by The Regime (sweeping law offices without warrants or warning), did not meet with the constitutional principles that govern such searches that have been laid out in other decisions by the SCC.

Section 7 of the Charter – Everyone has the right to life, liberty, and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.”

Canada said that there is no section 7 violation for two reasons.

  • Canada submitted that the penal provisions of The Regime only applied to lawyers who fail to comply with FINTRAC and their reports but not their clients.

 

  • They also submitted that while the SCC has recognized that solicitor-client privilege is a principle of fundamental justice, the solicitor-client relationship also counts as principles of fundamental justice. They justify that the nature of information flowing from lawyers to FINTRAC under the Regime does not represent a breach of this privilege and that information-gathering is could be seen as an exception to the solicitor-client relationship.

 

However, The Majority with respect to 1) rejected Canada’s submission that there were no liberty interests at stake. The infringement of the liberty interests of lawyers was sufficient to trigger a violation of Section 7.

The Majority in respect to 2) said that the provisions in question “limit the liberty of lawyers in a way that is not in accordance with the principle of fundamental justice in relation to the lawyer’s duty of commitment to the client’s cause.”

Findings

The court established that the duty of commitment to the client’s cause is a principle of fundamental justice and the Majority had no problem finding that The Regime did not act in accordance with it. The government intrusion facilitated by FINTRAC, interferes with a lawyer’s commitment to his or her client’s cause.

While the court’s decision recognizes the legal significance of a lawyer’s loyalty to their client, there are some deficiencies in the decision as maintaining this loyalty requires some measure of constitutional protection against government interference.  Finally, the findings make it difficult to discern what exact rights a lawyer has in this position.