Law Society Of Ontario Adds Amendments To Combat Money Laundering

The Law Society of Ontario recently passed By-Law amendments aimed at enhancing diligence requirements in order to stop licensees from helping clients in money laundering and terrorist financing.

The Professional Regulation Committee implemented the changes at the Convocation late May, with the changes to By-Laws 7.1 and 9 under the Law Society Act passing with 37 votes in favor, 14 against, and one abstention. Law firms like MyDefence.ca have time to prepare, as the amendments will only take effect by 2022. In the interim, the Law Society will provide education and resources to help legal professionals adapt to the new requirements.

Professional Regulation Committee Chair Megan Shortreed stated that the Law Society of Ontario needs to provide its licensees with the direction and guidance that they need so that they meet diligence standards and not assist clients in anything that can be considered as unsavory or illegal activity.

Committee Vice-Chair Jacqueline Horvat stated that the amendments are all about bolstering the Law Society’s anti-money-laundering defenses, as well as providing licensees the knowledge and protection to stop them from being unwittingly caught up in money laundering and terrorist financing.

Horvat, a litigator and founder of Spark LLP, stated that these changes are part of the effort by law societies in Canada to ensure that the legal system and its practitioners have an updated and comprehensive regulatory scheme that protects legal practitioners from getting caught up in problematic transactions.

There was some opposition to the amendments, however, with Bencher Gerard Charette saying that the changes put small and solo firms in peril.

Charette stated that the amendment is problematic for lawyers, law firms like MyDefence.ca, and their clients, as it forces the former two to interrogate the last. They note that it won’t survive Constitutional challenges.

They explained that the larger firms, thanks to their resources and funding, will be able to meet the vague professional standards set by the amendments, while the smaller firms would not do so well.

Shortreed noted that the new requirements don’t actually require their licensees to conduct investigations, explaining that, for most, the recorded information from the client will provide sufficient proof of obligation and compliance.

She stated that only when the client provides information that can be considered unusual, unreasonable, or doesn’t match up with the licensees have on the client, is when questioning and professional judgment is needed, which isn’t that much different from the terms set before the amendments.