Cut flow of dirty money, Ottawa is urged

It's recommending that lawyers be required to meet customer-identification, record-keeping and reporting requirements of Canada's anti-money-laundering laws in a manner that doesn't breach the confidentiality of lawyer-client privilege…Lawyers are officers of the court and they have an obligation to the public interest as well as anybody else,"…

The Globe and Mail
October 4, 2006

Cut flow of dirty money, Ottawa is urged
Steve Chase

OTTAWA — The amount of dirty money laundered in Canada each year by criminals and terrorists "is probably in the tens of billions of dollars," a high-profile Senate committee reported yesterday — far higher than what's been uncovered to date.

The Senate banking, trade and commerce committee also called on Ottawa to broaden the scope of efforts to detect illicit money, saying officials should start monitoring jewellers, lawyers and generic bank-machine operators for suspicious transactions.

"The size and scope of the problem is much more … than we expected," committee chair Senator Jerry Grafstein said, adding that a precise estimate of the activity wasn't possible because the committee didn't find one.

The committee's estimate of the problem dwarfs what Canada's anti-money-laundering authorities have uncovered to date. In 2005, the Financial Transactions and Reports Analysis Centre of Canada, flagged more than $2-billion worth of dirty-money transactions.

The report lists gaps in Canada's dirty-cash detecting system, saying there are a host of sectors ripe for abuse by money launderers and terrorist fundraisers from diamonds to no-name bank machines and independently owned and operated pubs.

Criminals have been driven to new methods as authorities have tightened reporting and tracking requirements in the financial services sector where they have traditionally operated, the report says. "The criminal mind is an agile and creative one so legislators have to constantly review and update our laws to keep pace," Mr. Grafstein said.

The Senate committee is calling on Ottawa to require dealers in precious metals, gemstones and jewellery to report suspicious cash transactions above $10,000.

It's recommending that lawyers be required to meet customer-identification, record-keeping and reporting requirements of Canada's anti-money-laundering laws in a manner that doesn't breach the confidentiality of lawyer-client privilege.

"There should be some type of amendment to deal with it to ensure the suspicious transactions are brought to the surface. Lawyers are officers of the court and they have an obligation to the public interest as well as anybody else," Mr. Grafstein said.

Lawyers have long fought efforts by Ottawa to get them to spy on clients and supply information about their finances. The federal government granted them an exemption in 2003 but has recently been negotiating on other efforts the legal community could make.

Lawyers groups say they've already taken steps to meet federal concerns, including enacting rules prohibiting them from accepting more than $7,500 cash from clients, but are willing to keep negotiating.

Experts say the report's estimate of the scale of money laundering in Canada is plausible. "It's many times bigger than what's been tracked so far," said Chris Walker, president of About Business Crime Solutions, a firm that helps companies comply with anti-money-laundering disclosure rules.

Mr. Walker said unlabelled bank machines — which anyone can buy — are the "perfect vehicle" for whitewashing money because there's no monitoring of who loads them with bills. "What you've walked out with could be [cash] that two or three days earlier paid for four hits of whatever drug and now you've got the dirty money," Mr. Walker said.

He thinks Ottawa will have to keep expanding its monitoring to include car and truck dealers, too.

The Senate report comes during an important year for Canada's fight against money laundering and terrorist financing. In June, 17 people were arrested in anti-terrorism raids in Southern Ontario. That month Canada also agreed to become the permanent home for the Egmont Group, a global body that co-ordinates the battle against dirty cash in 101 countries. In July, Canada also began a one-year term as chair of the Financial Action Task Force, an international group that tracks illicit cash.


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Risks: Money laundering, Solicitor-client privilege used to shield white-collar crime (self and others), Canada, 20061004 Cut flow

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