We have been following the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, as amended (the Act), and its Regulations (collectively referred to as the “Regime”) with interest. The Regime has important implications for the relationships between financial entities and their clients, as well as lawyers and their clients.

Briefly, the Regime, as drafted, compels lawyers and other professionals to collect and maintain information and prepare prescribed documents about their clients for the specific purpose of the Regime. It establishes the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). It permits FINTRAC to execute of warrantless searches of the offices and computers belonging to people or entities that are subject to the Regime, and it sets out penal consequences for those who do not comply.

The SCC has now held that the impugned sections of the Regime relating to lawyers are unconstitutional.[1]

As discussed at the end of this article, the SCC’s decision may represent a victory for Charter rights, but it raises questions about our government’s ongoing role in the global Financial Action Task Force.

Procedural Background

The Actwas enacted in 2000 and amended in 2008. It is the basis of Canada’s anti-money laundering and anti-terrorist funding regime.  The Act applies to financial institutions and intermediaries set out in section 5 of the Act, including banks and trust companies. You can read more about the background and the global context in which the Regime was drafted and enacted here.

In 2011, the Federation of Law Societies of Canada (FLSC) filed a petition in British Columbia challenging the constitutionality of several sections of the Regime. The petition was heard in Chambers, and the Chambers Judge found that the Regime offended therights of lawyers and their clients in a manner that did not accord with solicitor-client privilege pursuant to s. 7 of the Charter.[2]The British Columbia Court of Appeal agreed, the Government of Canada appealed, and the Supreme Court of Canada upheld the BCCA decision and dismissed the appeal.

Section 8 Charter Analysis

Justice Cromwell for the Majority (LeBel, Abella,Karakatsanis and Wagner JJ.) focused his reasons primarily on section 8 analysis (notably, the section 8 analysis was not an issue before the Chambers judge or the BCCA). Section 8 of the Charter provides that “Everyone has the right to be secure against unreasonable search or seizure.”[3]

Canada submitted that the search powers enabled by the Regime were regulatory in nature, not criminal, so the warrantless searches were not unreasonable. The Majority rejected Canada’s submissions and found that the procedures authorized by the Regime (sweeping, warrantless searches of law offices) do not meet with the constitutional principles governing such searches as set out in the SCC’s decision in Lavallee, Rackel & Heintz v. Canada (Attorney General).[4]

Section 7 Analysis

The Majority then turned to the section 7 analysis. There are two steps to the analysis under s. 7 of the Charter.  The first is to determine whether the challenged provisions limit the right to life, liberty or security of the person.  If they do, the analysis moves to the second step of determining whether that limitation is in accordance with the principles of fundamental justice.[5]

This was Canada’s main issue on appeal – Canada submitted that there is no section 7 violation for two reasons. With respect to the first step of the section 7 analysis, Canada submitted that the penal provisions of the Regime applied only to lawyers who fail to comply with FINTRAC reporting, not their clients, so in Canada’s view there are no section 7 liberties at stake.

With respect to the second step of the section 7 analysis, Canada submitted that while the SCC has recognized that solicitor-client privilege is a principle of fundamental justice, it has not gone beyond that to find all aspects of the solicitor-client relationship are also principles of fundamental justice. Accordingly, Canada submitted that the nature of information flowing from lawyers to FINTRAC under the Regime does not represent a breach of privilege. Furthermore, Canada submitted that while that information-gathering may represent an exception to other aspects of the solicitor-client relationship, that relationship is not, as a whole, a principle of fundamental justice. Canada also took issue with the BCCA’s finding that the independence of the Bar is a principle of fundamental justice, but the SCC declined to consider that issue.

With respect to the first step of the section 7 analysis, the Majority rejected Canada’s submission that there are no liberty interests at stake. For the Majority, the infringement of the liberty interests of lawyers was sufficient to trigger a violation of section 7.[6]

With respect to the second step in the section 7 analysis, the Majority found that the impugned provisions “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.”[7][emphasis added]

This finding is interesting. On the face of the decision, there appears to be no question that solicitor-client privilege is a principle of fundamental justice. The Minority (McLachlin C.J. and Moldaver J.) certainly came to that very conclusion when it held that breach of solicitor-client privilege is sufficient to establish the potential deprivation of liberty that would violate section 7.[8] The Majority also appears to have come to that conclusion, albeit in passing: “[g]iven my conclusion concerning s. 8, there is no need to conduct a separate analysis relating to the proposed principle of fundamental justice relating to solicitor-client privilege.”[9]

But the “duty of commitment to the client’s cause” was not put to either court below. A search of the Factums of the Appellant, the Respondent, and Interveners filed with the SCC did not reveal the use of the phrase “duty of commitment to the client’s cause.” Where, then, did this concept come from?

Privilege + Confidentiality + Loyalty = Duty of Commitment to the Client’s Cause?

The webcast of the hearing is revealing. During the FLSC’s submissions, McLachlin C.J. observed that “privilege” is a doctrine of evidence that prevents certain information from being admitted to court as evidence. Yet the Respondent’s submissions seemed to ask the Court to combine this evidentiary rule with other concepts, such as solicitor-client confidentiality, and then to find that the amalgam of privilege and confidentiality is a principle of fundamental justice. McLachlin C.J. suggested that in order for the Court to find that solicitor-client privilege is a principle of fundamental justice, it must be more precisely defined.

The Respondent replied by taking the Court to various definitions of the duty of loyalty, which arguably is not the same thing as privilege or confidentiality.

Justice Abella inquired about existing reporting obligations on the part of lawyers. The Respondent conceded that lawyers are in fact required by their respective provincial Law Society rules to waive solicitor-client confidentiality in certain circumstances, such as when a lawyer is concerned that their client poses a risk of serious harm to individuals or the public. Justice Abella queried whether the existing exceptions to confidentiality could also be applied to risks of money laundering and terrorist financing as contemplated by the Regime.

McLachlin C.J. took Justice Abella’s questions a step further and pointed out the intellectual difficulty in establishing solicitor-client confidentiality as a principle of fundamental justice: it is already “honey-combed” by a number of other exceptions.

In response to these questions and comments from the Court, the FLSC submitted that the Regime is the only statute that would require lawyers to create prescribed records about their clients for sole the purpose of aiding the criminal investigation and prosecuting their clients; all other regulatory requirements that see lawyers maintaining records are enacted for the purpose of ensuring the lawyer’s conduct is keeping with Law Society rules.

This submission does not entirely alleviate the intellectual problem cited by the Court. If lawyers are required to report a risk of harm, and if that report leads to the investigation and prosecution of their client, then that exception to solicitor-client confidentiality does not appear to be substantively different from the Regime’s reporting requirements.

Perhaps this is why the Majority felt more comfortable rooting its findings of unconstitutionality in the section 8 analysis, which did not require the Court to define solicitor-client privilege and/or confidentiality and find that it is a principle of fundamental justice for the purpose of section 7.

In any event, the Court was able to bridge the above-referenced intellectual problem by finding that one aspect of the solicitor-client relationship is the duty of commitment to the client’s cause, and then finding that this duty requires constitutional protection from state intervention:

The question now is whether another central dimension of the solicitor-client relationship — the lawyer’s duty of commitment to the client’s cause — also requires some measure of constitutional protection against government intrusion. In my view it does, for many of the same reasons that support constitutional protection for solicitor-client privilege. “The law is a complex web of interests, relationships and rules. The integrity of the administration of justice depends upon the unique role of the solicitor who provides legal advice to clients within this complex system”: McClure, at para. 2. These words, written in the context of solicitor-client privilege, are equally apt to describe the centrality to the administration of justice of the lawyer’s duty of commitment to the client’s cause. A client must be able to place “unrestricted and unbounded confidence” in his or her lawyer; that confidence which is at the core of the solicitor-client relationship is a part of the legal system itself, not merely ancillary to it: Smith v. Jones, 1999 CanLII 674 (SCC), [1999] 1 S.C.R. 455, at para. 45, citing with approval, Anderson v. Bank of British Columbia (1876), 2 Ch. D. 644 (C.A.); McClure. The lawyer’s duty of commitment to the client’s cause, along with the protection of the client’s confidences, is central to the lawyer’s role in the administration of justice.

We should, in my view, recognize as a principle of fundamental justice that the state cannot impose duties on lawyers that undermine their duty of commitment to their clients’ causes.  Subject to justification being established, it follows that the state cannot deprive someone of life, liberty or security of the person otherwise than in accordance with this principle.[10] 

…

I conclude that there is overwhelming evidence of a strong and widespread consensus concerning the fundamental importance in democratic states of protection against state interference with the lawyer’s commitment to his or her client’s cause.

The duty of commitment to the client’s cause ensures that “divided loyalty does not cause the lawyer to ‘soft peddle’ his or her [representation]” and prevents the solicitor-client relationship from being undermined: Neil,at para. 19; McKercher,at paras. 43-44. In the context of state action engaging s. 7 of the Charter, this means at least that (subject to justification) the state cannot impose duties on lawyers that undermine the lawyer’s compliance with that duty, either in fact or in the perception of a reasonable person, fully apprised of all of the relevant circumstances and having thought the matter through. The paradigm case of such interference would be state-imposed duties on lawyers that conflict with or otherwise undermine compliance with the lawyer’s duty of commitment to serving the client’s legitimate interests.[11]

The Regime is not consistent with the Duty of Commitment to the Client’s Cause

Having established that the duty of commitment to the client’s cause is a principle of fundamental justice, the Majority had no problem finding that the Regime did not accord with it.

The crux of the FLSC’s oral submissions, and their concern about the Regime, was the notion that clients must be free to ask their lawyers for advice about what conduct is legal or illegal. If clients know that lawyers will generate a record of that interaction for use by FINTRAC, which can be inspected by FINTRAC and disclosed to law enforcement agencies, then clients would quite rightly see lawyers as conflicted insofar as lawyers must assist the state in its investigative and prosecutor activities.

The Majority agreed:

The reasonable and well-informed client would see his or her lawyer being required by the state to collect and retain information that, in the view of the legal profession, is not required for effective and ethical representation and with respect to which there are inadequate protections for solicitor-client privilege. Clients would thus reasonably perceive that lawyers were, at least in part, acting on behalf of the state in collecting and retaining this information in circumstances in which privileged information might well be disclosed to the state without the client’s consent. This would reduce confidence to an unacceptable degree in the lawyer’s ability to provide committed representation.[12]

Commentary

The SCC’s reasons provide a thorough analysis of the various aspects of the lawyer-client relationship. The decision does not alter or erode the status of solicitor-client privilege as a principle of fundamental justice; indeed, this is affirmed by both the Majority and the Minority.

However, the Court does appear to be divided in its approach to finding that certain sections of the Regime violated section 7. The Majority was not moved by submissions that sought to combine — and perhaps confuse — notions of privilege with confidentiality and loyalty. In addition, the Majority may not have felt that the “honey-combed” notion of solicitor-client confidentiality provided solid footing for a finding of unconstitutionality.

The Minority does not appear to have shared those concerns.

Notably, nothing in the SCC’s decision applies to the many other professionals and financial entities caught within application of the Regime. Banks, trust companies, life insurance companies, etc. all must continue to collect and produce prescribed records. They continue to be subject to the spectre of the warrantless searches and are subject to penal consequences for failing to comply with the Regime.

It may be of interest to readers to be aware of the larger, global context in which this litigation is taking place. As we explained in more detail in a previous post:

Canada is a founding member of the Financial Action Task Force (FATF), the international standard setting body for Anti-Money Laundering / Anti-Terrorist Funding activities. Canada is under some international pressure to show leadership in combating money laundering and terrorist funding.⁸ Yet in June of 2007, the FATF evaluated Canada’s compliance with FATF Recommendations. It found a number of deficiencies and noted that lawyers, among other Non-Financial Businesses and Professions, were not captured by the PCMLTFA (in part due to the ongoing Charter challenges) and therefore were not subject to the requirements under some of the FATF Recommendations.¹⁰  As a result, Canada is on the FATF’s regular follow-up process; this is considered the first step in a graduated process of disciplinary action to encourage countries to improve their regimes and compliance with the FATF standards.

Indeed, the following excerpt from Parliament’s Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce, which reviewed Bill C-25 (the amendments to the Regime that made the Regime applicable to lawyers) reflects the government’s concerns about Canada’s relative leniency regarding lawyers:

Senator Angus: … I have a specific question. We have been told by some folks who seem to be in the know that other countries in this task force to which you referred have been tougher on the lawyers. It is almost suggested to us that Canada is copping out a bit in that area. I must share with you that we recently visited New York where we met with the district attorney of Manhattan and noted that their provisions concerning their lawyers are tougher than ours. We know that in the antecedent legislation ours were tougher but the Charter was invoked resulting in an injunction and you were not able to enforce those provisions in respect of lawyers, rightly or wrongly.

You have described to us a process that has been put in place. After reading that, as well as the brief we received yesterday from the Federation of Law Societies, other recent court decisions about solicitor-client privilege in Canada and the weakening of that so-called privilege, I ask you how Canadians can be comfortable with what you refer to as “compliance enforcement under the model understanding that has been worked out?” We are quite concerned about that.

Mr. Flaherty: I guess we are both lawyers and we can talk about this.

Senator Angus: There are quite a few around the table.

Mr. Flaherty: Yes, quite a few. You are right; there were legal proceedings in Canada. As you know, there were injunctions relating to reporting issues and solicitor-client privilege issues.

I met with representatives from the legal community for a vigorous discussion on this several months ago. I welcome the help of this committee and your ongoing work on this issue, among others, but particularly on this issue, because it is not without difficulty, given the established right of solicitor-client privilege. I am confident the law societies will enforce the rule about $7,500 cash transactions. I suppose it may become less important over time as we move towards a society in which cash is not used very much and everything is done by debit cards and credit cards. For the time being, this rule is one we ought to watch and hope for stringent enforcement by the law societies in Canada. As I say, I welcome your further advice on this subject.

Senator Angus: Are you comfortable that your officials or the enforcement agencies will have sufficient investigative authority under this compromise to make it work? It seems on its face to be a glaring loophole.

Mr. Flaherty: I suppose we have to trust lawyers to obey the rules. They are lawyers, and they are supposed to understand the law and know and obey the law. Their own societies are saying to them, as conditions of membership, that they obey this rule. If they do not obey the law, they risk disbarment and losing their ability to make a living from practicing law. That is a fairly serious consequence to not complying with the $7,500 rule.

Senator Angus: Thank you.[13]

While lawyers in Canada may be pleased with the SCC’s decision, the Government of Canada is now faced with the task of reconciling the SCC’s decision with Canada’s obligations as a founding member of the FATF. Perhaps the SCC’s decision will serve as an opportunity for Canada to reconsider its role in FATF. Should we be taking a leadership role in a global scheme that views our Charter rights as an inconvenient obstacle, at best, or as legislation that invites disciplinary action?

In Closing, a Table

You may not want to spend your time playing snakes and ladders with the legislation and the Judgment to figure out what the SCC held in respect of what section, so we have done that for you.

Each section consists of 3 parts:
1. Section #
2. Content of Statute
3. SCC Finding

ss 5(i) of the Act

This Part applies to the following persons and entities: …(i) persons and entities engaged in a business, profession or activity described in regulations made under paragraph 73(1)(a);[ss. 73. (1) The Governor in Council may, on the recommendation of the Minister, make any regulations that the Governor in Council considers necessary for carrying out the purposes and provisions of this Act, including regulations

• (a) describing businesses, professions and activities for the purpose of paragraph 5(i);

SCC: Does not infringe s. 7 or s. 8

—

ss 5 (j) of the Act

This Part applies to the following persons and entities: … (j) persons and entities engaged in a business or profession described in regulations made under paragraph 73(1)(b), while carrying out the activities described in the regulations; 

3.  (1) The Governor in Council may, on the recommendation of the Minister, make any regulations that the Governor in Council considers necessary for carrying out the purposes and provisions of this Act, including regulations … (j) prescribing, for the purposes of subsection 9.3(1), the manner for determining whether a person is a politically exposed foreign person and the circumstances in which it is necessary to make that determination;

SCC: Does not infringe s. 7 or s. 8

—

Warrantless Search and Seizure Provisions
s. 62 of the Act

2.  (1) An authorized person may, from time to time, examine the records and inquire into the business and affairs of any person or entity referred to in section 5 for the purpose of ensuring compliance with Part 1 or 1.1, and for that purpose may [emphasis added]

• (a) at any reasonable time, enter any premises, other than a dwelling-house, in which the authorized person believes, on reasonable grounds, that there are records relevant to ensuring compliance with Part 1 or 1.1 [emphasis added];

o (b) use or cause to be used any computer system or data processing system in the premises to examine any data contained in or available to the system;

o (c) reproduce any record, or cause it to be reproduced from the data, in the form of a printout or other intelligible output and remove the printout or other output for examination or copying; and

o (d) use or cause to be used any copying equipment in the premises to make copies of any record.

(2) The owner or person in charge of premises referred to in subsection (1) and every person found there shall give the authorized person all reasonable assistance to enable them to carry out their responsibilities and shall furnish them with any information with respect to the administration of Part 1 or 1.1 or the regulations under it that they may reasonably require.

SCC: To the extent that this section applies to documents in the possession of lawyers / firms, it Infringes s. 8, and the infringement cannot be justified under s. 1 of the Charter.

Remedy: read it down to exclude legal counsel and legal firms from the scope of its operation.

Not necessary to consider whether it infringes s. 7.

—

When Warrant Required for Search and Seizure
s. 63 of the Act

3.  (1) If the premises referred to in subsection 62(1) is a dwelling-house, the authorized person may not enter it without the consent of the occupant except under the authority of a warrant issued under subsection (2).

(2) A justice of the peace may issue a warrant authorizing the authorized person to enter a dwelling-house, subject to any conditions that may be specified in the warrant, if on ex parte application the justice is satisfied by information on oath that

• (a) there are reasonable grounds to believe that there are in the premises records relevant to ensuring compliance with Part 1 or 1.1;
• (b) entry to the dwelling-house is necessary for any purpose that relates to ensuring compliance with Part 1 or 1.1; and
• (c) entry to the dwelling-house has been refused or there are reasonable grounds for believing that entry will be refused.

(3) For greater certainty, an authorized person who enters a dwelling-house under authority of a warrant may enter only a room or part of a room in which the person believes on reasonable grounds that a person or an entity referred to in section 5 is carrying on its business, profession or activity.

SCC: To the extent that this section applies to documents in the possession of lawyers / firms, it Infringes s. 8, and the infringement cannot be justified under s. 1 of the Charter.

Remedy: read it down to exclude legal counsel and legal firms from the scope of its operation.

Not necessary to consider whether it infringes s. 7.

—

FINTRAC can provide Notice instead of conducting searches
s 63.1 of the Act

63.1 (1) For an examination under subsection 62(1), an authorized person may also serve notice to require that the person or entity provide, at the place and in accordance with the time and manner stipulated in the notice, any document or other information relevant to the administration of Part 1 or 1.1 in the form of electronic data, a printout or other intelligible output. [emphasis added](2) The person or entity on whom the notice is served shall provide, in accordance with the notice, the documents or other information with respect to the administration of Part 1 or 1.1 that the authorized person may reasonably require.

SCC: To the extent that this section applies to documents in the possession of lawyers / firms, it Infringes s. 8, and the infringement cannot be justified under s. 1 of the Charter.

Remedy: read it down to exclude legal counsel and legal firms from the scope of its operation.

Not necessary to consider whether it infringes s. 7.

—

Procedure for claiming privilege
s. 64 of the Act

4.  (1) In this section, “judge” means a judge of a superior court having jurisdiction in the province where the matter arises or a judge of the Federal Court.

(2) If an authorized person acting under section 62, 63 or 63.1 is about to examine or copy a document in the possession of a legal counsel who claims that a named client or former client of the legal counsel has a solicitor-client privilege in respect of the document, the authorized person shall not examine or make copies of the document.

(3) A legal counsel who claims privilege under subsection (2) shall

• (a) place the document, together with any other document in respect of which the legal counsel at the same time makes the same claim on behalf of the same client, in a package and suitably seal and identify the package or, if the authorized person and the legal counsel agree, allow the pages of the document to be initialled and numbered or otherwise suitably identified; and
• (b) retain it and ensure that it is preserved until it is produced to a judge as required under this section and an order is issued under this section in respect of the document.

(4) If a document has been retained under subsection (3), the client or the legal counsel on behalf of the client may

• (a) within 14 days after the day the document was begun to be so retained, apply, on three days notice of motion to the Deputy Attorney General of Canada, to a judge for an order

o (i) fixing a day, not later than 21 days after the date of the order, and a place for the determination of the question whether the client has solicitor-client privilege in respect of the document, and

o (ii) requiring the production of the document to the judge at that time and place;

• (b) serve a copy of the order on the Deputy Attorney General of Canada; and
• (c) if the client or legal counsel has served a copy of the order under paragraph (b), apply at the appointed time and place for an order determining the question.

(5) An application under paragraph (4)(c) shall be heard in private and, on the application, the judge

• (a) may, if the judge considers it necessary to determine the question, inspect the document and, if the judge does so, the judge shall ensure that it is repackaged and resealed;
• (b) shall decide the question summarily and

o (i) if the judge is of the opinion that the client has a solicitor-client privilege in respect of the document, order the release of the document to the legal counsel, or

o (ii) if the judge is of the opinion that the client does not have a solicitor-client privilege in respect of the document, order that the legal counsel make the document available for examination or copying by the authorized person; and

• (c) at the same time as making an order under paragraph (b), deliver concise reasons that identify the document without divulging the details of it.

(6) If a document is being retained under subsection (3) and a judge, on the application of the Attorney General of Canada, is satisfied that no application has been made under paragraph (4)(a) or that after having made that application no further application has been made under paragraph (4)(c), the judge shall order that the legal counsel make the document available for examination or copying by the authorized person.

(7) If the judge to whom an application has been made under paragraph (4)(a) cannot act or continue to act in the application under paragraph (4)(c) for any reason, the application under paragraph (4)(c) may be made to another judge.

(8) No costs may be awarded on the disposition of an application under this section.

(9) The authorized person shall not examine or make copies of any document without giving a reasonable opportunity for a claim of solicitor-client privilege to be made under subsection (2).

(9.1) The authorized person shall not examine or make copies of a document in the possession of a person, not being a legal counsel, who contends that a claim of solicitor-client privilege may be made in respect of the document by a legal counsel, without giving that person a reasonable opportunity to contact that legal counsel to enable a claim of solicitor-client privilege to be made.

(10) If a legal counsel has made a claim that a named client or former client of the legal counsel has a solicitor-client privilege in respect of a document, the legal counsel shall at the same time communicate to the authorized person the client’s latest known address so that the authorized person may endeavour to advise the client of the claim of privilege that has been made on their behalf and may by doing so give the client an opportunity, if it is practicable within the time limited by this section, to waive the privilege before the matter is to be decided by a judge.

SCC: This section Infringes s. 8, and the infringement cannot be justified under s. 1 of the Charter.

Remedy: this section is of no force or effect.

Not necessary to consider whether it infringes s. 7.

Note: unlike the SCC’s holding in respect of ss 62, 63, and 63.1, the SCC did not limit the scope of this infringement to the extent that it applies to lawyers and law firms; the court found that this section was more “controversial” than the other sections.

In Lavalee the SCC held that the constitutional infirmity in s. 488.1 of the Criminal Code flowed from the absence of provisions requiring notice to the holder of the privilege, which means the client may not even be aware that his or her privilege is threatened. This concern is not adequately addressed by this section.

Section 64(6) denies discretion to the judge to assess the claim of privilege on his or her own motion. Absent an application by the lawyer, the Judge must make the material available to the official.

Examining and copying proceeds until there is a specific assertion of privilege — an approach that greatly elevates the risk that privileged material will be examined. Moreover, the name of the client may itself be (although is not always) subject to solicitor-client privilege.  In a situation in which it is, the Actrequires the lawyer to breach that privilege in order to claim the privilege attaching to the material sought by the official.

The same may be said about the obligation of the lawyer under s. 64(10) to provide the authorities with the latest known address for the client.

—

The Regulations
11.1 of the Regs
[sets out the records and information that must be collected by prescribed financial entities or securities dealers who are subject to the Act and Regulations]

To the extent that this section applies to lawyers / firms, it infringes s. 7, and the infringement cannot be justified under s. 1 of the Charter.

33.3 of the Regs

(1) Subject to subsection (2), every legal counsel and every legal firm is subject to Part 1 of the Act when they engage in any of the following activities on behalf of any person or entity:

• (a) receiving or paying funds, other than those received or paid in respect of professional fees, disbursements, expenses or bail; or
• (b) giving instructions in respect of any activity referred to in paragraph (a).

(2) Subsection (1) does not apply in respect of legal counsel when they engage in any of the activities referred to in that subsection on behalf of their employer.

SCC: It infringes s. 7, and the infringement cannot be justified under s. 1 of the Charter.

—

33.4 of the Regs

Subject to subsection 62(2), every legal counsel and every legal firm shall, when engaging in an activity described in section 33.3, keep the following records:

• (a) a receipt of funds record in respect of every amount of $3,000 or more that they receive in the course of a single transaction, unless the amount is received from a financial entity or a public body; and
• (b) where the receipt of funds record is in respect of a client that is a corporation, a copy of the part of official corporate records that contains any provision relating to the power to bind the corporation in respect of transactions with the legal counsel or legal firm.

SCC: It infringes s. 7, and the infringement cannot be justified under s. 1 of the Charter.

—
59.4 of the Regs
(1) Subject to subsections (2) and 62(2) and section 63, every legal counsel and every legal firm shall, in respect of a transaction for which a record is required to be kept under section 33.4,

• (a) in accordance with subsection 64(1), ascertain the identity of every person who conducts the transaction;
• (b) in accordance with section 65, confirm the existence of and ascertain the name and address of every corporation on whose behalf the transaction is conducted and the names of the corporation’s directors; and
• (c) in accordance with section 66, confirm the existence of every entity, other than a corporation, on whose behalf the transaction is conducted.

(2) Subsection (1) does not apply in respect of a transaction for which funds are received by a legal counsel or legal firm from the trust account of a legal firm or from the trust account of a legal counsel who is not acting on behalf of their employer.

SCC: It infringes s. 7, and the infringement cannot be justified under s. 1 of the Charter.

—
[1] Canada (Attorney General) v. Federation of Law Societies of Canada, 2015 SCC 7 (CanLII) [“SCC”].
[2] Federation of Law Societies of Canada v. Canada (Attorney General), 2011 BCSC 1270 (CanLII).
[3] Charter, supra note 2, s. 8.
[4] 2002 SCC 61 (CanLII), [2002] 3 S.C.R. 209.
[5] SCC para 69, citing Canada (Attorney General) v. Bedford, 2013 SCC 72 (CanLII), [2013] 3 S.C.R. 1101, at para. 57; Blencoe v. British Columbia (Human Rights Commission), 2000 SCC 44 (CanLII), [2000] 2 S.C.R. 307, at para. 47.
[6] SCC para 71.
[7] SCC para 70.
[8] SCC para 120.
[9] SCC para 8.
[10] SCC paras 83 and 84.
[11] SCC paras 102 and 103.
[12] SCC para 109.
[13] The Standing Senate Committee on Banking, Trade and Commerce, Issue 12 – Evidence – Meeting of December 6, 2006, accessed online: http://www.parl.gc.ca/Content/SEN/Committee/391/bank/12eva-e.htm?Language=E&Parl=39&Ses=1&comm_id=3