Canada watchdog report: Lawyers pose money laundering risk

By Julie Gordon and Elizabeth Dilts
VANCOUVER/NEW YORK, April 7 (Reuters) - An internal report
prepared for Canada's anti-money laundering watchdog last year
found that lawyers are the second most likely profession after
entrepreneurs to face money laundering charges.
Details of the 2015 research paper released in draft form to
Reuters under Access to Information laws, come as the leak of
millions of documents from a Panamanian law firm have caused
public outrage about the role lawyers play in helping clients
hide their wealth.
The paper was produced for the Financial Transactions and
Reports Analysis Centre of Canada (FINTRAC) to consider in
refining its anti-money laundering regime. The regulator said it
uses this type of research to strengthen compliance and inform
legislators of vulnerabilities.
Lawyers in Canada, unlike financial institutions and other
professionals, are exempt from the obligation to report
suspicious transactions, allowing them to use trust accounts to
move around money for clients without notifying regulators.
The exemption, won after a Supreme Court of Canada ruling,
irks law enforcement and regulators, who say that while many
lawyers abide by ethical standards, the lack of transparency
makes it easy for others to hide illicit funds.
"In Canada, we are somewhat unique in that lawyers do not
have to monitor or report suspicious transactions," said
Christine Duhaime, a lawyer and money laundering expert. "That
makes Canada more susceptible to being used for all types of
financial crime."
The FINTRAC paper, which looked at 40 money laundering cases
in Canada from 2000 to 2014, found court documents showing
"lawyers convicted of money laundering were willing to exploit
reporting exemptions in order to launder funds."
A companion intelligence report prepared by FINTRAC took a
more damning tone, noting that in certain cases the lawyers
"took advantage of their position" to knowingly circumvent
regulations and aid in money laundering.
The paper said lawyers charged with money laundering
represented 15 percent of all cases they studied and 25 percent
of all professional money laundering service providers. The
average sentence in all convictions was 4.6 years, though the
brief did not break it down by profession.
Lawyers in Canada cannot accept cash transactions of more
than C$7,500, though larger amounts can be wired, and must
report suspicious activity by other lawyers to their law
societies.
The Law Society of British Columbia said it has taken steps
to prevent money laundering, noting they "rarely, if ever, get
information from lawyers about possible money laundering" and
that cash rule breaches have numbered fewer than ten since 2009.
($1 = 1.3110 Canadian dollars)