Money laundering: thank you, Canada

Please rise to sing the Canadian national anthem: ‘O Canada!, Our home and native land!, True patriot love in all thy sons command’… and so on. Today all lawyers should hail Canada.

That is because the Canadian Supreme Court has recently published a significant opinion on the impact of money laundering on lawyer-client confidentiality. It is the final outcome of lengthy litigation between the Canadian legal profession and their government over duties imposed on lawyers by money laundering legislation. The legal profession fought all the way, and has finally won a conclusive victory.

The Canadian legislation is not the same as the EU anti-money laundering directives. There is a duty to collect, record and retain material, including information verifying the identity of clients. The relevant government agency can search for and seize that material. There are fines and penal consequences for non-compliance. (The Canadian legal profession has also developed practice standards on money laundering, narrower in scope than the legislative requirements.)

To see why we should praise Canada, I would like you to compare the court conclusions obtained at top level in Canada and Europe. Of course, each is operating within a different system, with different laws and norms, but it is significant that one finds that the law is disproportionate (Canada), and the other finds it proportionate (Europe).

The legal profession fought all the way, and has finally won a conclusive victory.

The Canadian Supreme Court said: ‘A reasonable and informed person, thinking the matter through, would perceive that these provisions are inconsistent with the lawyer’s duty of commitment to the client’s cause.

‘The scheme taken as a whole limits the liberty of lawyers in a manner that is not in accordance with the principle of fundamental justice relating to the lawyer’s duty of committed representation … There are other less drastic means to pursue the objectives of combating money laundering and terrorist financing. The provisions of the Regulations in issue in this appeal fail the proportionality test.’

Now here is the European Court of Human Rights – which some in this country accuse of being too soft on human rights – in a case brought by a French lawyer against the European anti-money laundering legislation (Michaud v France (Application no. 12323/11)):

‘In the light of the above considerations, the Court considers that, regard being had to the legitimate aim pursued and the particular importance of that aim in a democratic society, the obligation for lawyers to report suspicions, as practised in France, does not constitute disproportionate interference with the professional privilege of lawyers. There has therefore been no violation of article 8 of the Convention.’

The European Court of Justice has also had its say in a case on the same topic brought by the Belgian bars against their government (Ordre des barreaux francophones and germanophone, Ordre français des avocats du barreau de Bruxelles, Ordre des barreaux flamands, Ordre néerlandais des avocats du barreau de Bruxelles v Conseil des Ministres (Case C-305/05):

‘The obligations of information and of cooperation with the authorities responsible for combating money laundering… do not infringe the right to a fair trial as guaranteed by article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms and Article 6(2) EU.’

Thank you, European courts. It would be helpful to have an academic study on why there have been different outcomes. Does the variation follow automatically from the laws and procedures applied, or are the European courts more hostile to the notion that lawyer-client confidentiality is central to the rule of law?

The route of litigation now seems closed to European lawyers. But maybe the Canadian experience can continue to be a political inspiration to those of us who believe that the money laundering obligations imposed on the legal profession are disproportionate.

The fourth anti-money laundering directive has now passed nearly all its legislative phases, but maybe if – heaven help us! – there is a fifth anti-money laundering directive, we can thrust the Canadian Supreme Court judgment under the noses of officials and politicians and hope that sense will prevail on this side of the Atlantic, too.      

Jonathan Goldsmith is a consultant and former secretary-general at the Council of Bars and Law Societies of Europe, which represents around a million European lawyers through its member bars and law societies. He blogs weekly for the Gazette on European affairs