On February 13, 2015 the Supreme Court of Canada
("SCC") released a ruling in Canada
(Attorney General) v. Federation of Law Societies of Canada ending
a 15 year battle between Canadian lawyers and the federal
government with respect to the ability of the Financial
Transactions and Reports Analysis Centre of Canada
("FINTRAC") to, among other things,
search and seize files from lawyers' offices without a warrant
and hand out penalties to lawyers for non-compliance such as a fine
of up to $500,000 or 5 years in jail, or both.
FINTRAC is a Canadian administrative financial intelligence unit
that operates independently from law enforcement agencies. It is
mandated to facilitate the detection, prevention and deterrence of
money laundering and terrorist financing by collecting and
analyzing information, and disclosing that information, under
certain conditions, to law enforcement agencies. FINTRAC derives
its authority from the Proceeds of Crime (Money Laundering) and
Terrorist Financing Act which came into force in 2000 (the
"Act") and the 2001 Proceeds of Crime
(Money Laundering) and Terrorist Financing Suspicious Transaction
Reporting Regulations (the
"Regulations", and together with the
Act, the "Legislation").
In 2008, the Legislation was amended to require that certain
persons, including lawyers and notaries in the province of
Québec, take on obligations including collecting information
of clients potentially involved in money laundering or terrorist
funding and providing such information to FINTRAC.
In response, the Federation of Law Societies of Canada launched a
constitutional challenge against the Legislation on behalf of the
14 self-governing bodies that oversee lawyers in Canada arguing
that its provisions threaten solicitor-client privilege. In 2010,
the Federation and the Attorney General of Canada agreed to a
consent order exempting legal counsel and law firms from the
amendments pending determination of the proceedings.
On September 27, 2011, the British Columbia Supreme Court ruled
that the portions of the Legislation that applied to lawyers, law
firms and Québec notaries were unconstitutional and granted
an order severing and striking down the impugned provisions.
On appeal by the Attorney General, the British Columbia Court of
Appeal upheld the trial judge's decision. In reviewing the
Legislation, the court found that confidential client information
obtained by FINTRAC may be disclosed to law enforcement for the
purpose of ensuring lawyer compliance with the Legislation and may
then be used by the law enforcement agency for any purpose,
including pursuing a criminal charge against the client. The court
held that this regime engages the liberty interests of both clients
and lawyers in a manner which does not accord with the principles
of fundamental justice pursuant to section 7 of the Charter of
Rights and Freedoms and cannot be saved by section 1 of the
At the SCC level, the analysis focused on the section 8 Charter
right to be free of unreasonable searches and seizures. The SCC
held that the search provisions in the Legislation do not provide
the constitutionally required protection for solicitor-client
privilege and that such infringement cannot be saved by section 1
of the Charter, namely because there are other, less drastic means
of pursuing the objectives of combating money laundering and
In addition, the SCC identified a lawyer's duty of committed
representation as a new principle of fundamental justice which was
also infringed by the Legislation.
To remedy these infringements, the SCC declared section 64 of the
Act of no force or effect and read down sections 62, 63 and 63.1 so
that they do not apply to documents in the possession of legal
counsel or in law office premises. Similarly, sections 33.3, 33.4,
33.5, and 59.4 of the Regulations were declared of no force and
effect and section 11.1 read down so that it does not apply to
documents in the possession of legal counsel or in law office
This decision represents a long-awaited victory for lawyers who
can continue to represent their clients without fear of being used
as an agent of the state. Clients can rest easy knowing that
solicitor-client privilege and a lawyer's duty of committed
representation is protected by our highest court. However, the
legislation will continue to apply to financial institutions,
accountants and real estate firms.
The foregoing provides only an overview and does not
constitute legal advice. Readers are cautioned against making any
decisions based on this material alone. Rather, specific legal
advice should be obtained.
The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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