Law Society of Ontario calls for input into money laundering rules…

Law Society of Ontario calls for input into money laundering rules…

Law Society of Ontario calls for input into money laundering rules… Foxes designing hen house security

Money Laundering needs specialists

Lawyers are key to successful money laundering. That’s why the rules shouldn’t be left up to them.

During his acceptance speech as the co-winner of the 2015 Allard Prize for International Integrity, journalist Rafael Marques de Morais said “(unethical) Lawyers are servants in the architecture of corruption.”

Indeed they are. Lawyers are very necessary servants in the architecture of corruption for without lawyers willing to assist their valued clients, money laundering would be much more difficult for organized crime, crooked politicians, cheating corporations and others so inclinded to wash and conceal money here in Canada or offshore.

With Canadian banks and other named businesses having to report to the government large cash transactions (deposits or withdrawals over $10,000 cash) and also suspicious transactions – lawyers are the go-to people for weaseling around the laws because they are largely exempt from the reporting rules and constraints of non-lawyers. Plus, lawyers have a vast array of creative tools and strategies available – not to mention an international brotherhood that is experienced in working around inconvenient laws.

After 9/11, Canadian lawyers fought hard to keep from being more closely regulated and scrutinized over the issue of money transfers. They succeeded for a time, but the pressure is on again.

“The Law Society ‘solution’ for preventing money laundering is to rely entirely upon the integrity of individual lawyers – with no accounting or oversight by the law society or anyone else unless a complaint is made. Given that those involved in money laundering would never complain to the law society, that wraps things up quite nicely.”

Law Society of Ontario calls for input into money laundering rules

Canadian lawyers admit they are in fear of “the possibility of a renewed effort by the federal government to extend the PCMLTFA (Proceeds of Crime – Money Laundering – and Terrorist Financing Act) to members of the legal profession.” (See page 2 of the Law Society of Ontario’s Call for Input – download 1mb pdf here.)

As a result, the law societies across Canada have banded together with the Federation of Law Societies of Canada to present a little dog and pony show for the public and the legislators (who are primarily legal profession club members themselves.) The ‘club’ created a ‘Professional Regulation Committee’ and is calling for input from lawyers to the proposed amendments to the Anti-Money Laundering Rules.

A few minor changes coupled with a public relations campaign should do the trick… anything to stave off effective regulations that would cramp the profession’s ability to creatively serve the needs of their big-paying clients whom they don’t want anyone to look at too closely.

You will note how the LSO proposal deals with transfers of cash, identifying and verifying clients and the use of lawyer’s trust accounts. A closer read shows that the proposed changes still leave lots of leeway and discretion to individual money-laundering lawyers. The money laundering toolbox is still intact with private mortgages, property transfers, offshore corporations and lots more tools still viable as lawyers’ secret conduits for tainted money.

Focus on Cash is a red herring.

The focus upon cash is a red herring for Canadian lawyers. Most of the money-laundering lawyers in Canada are not involved with large cash transactions through their own hands. By the time money arrives in their law firm accounts, it is coming through banks and from other lawyers in the form of documented transfers, real estate sales to apparent arms length parties and staged business dealings that have just enough appearance of legitimacy to protect the involved lawyers and law firms.

A Global Witness undercover investigation showed that 25% of New York lawyers would money-launder for strangers walking in off the streets. That was for strangers, not valued and known clients. Do we think that proportion of crooked lawyers is any different in Toronto, London or Barbados?

LSO Treasurer Paul Schabas (left) covered up fraud and money-laundering indicators for corrupt lawyer Gerald Ranking.

Law Society of Ontario Treasurer Paul Schabas knew that lawyer Gerald Ranking fraudulently used a fake business entity in Ontario courts, and that Ranking received a million dollars in a trust account for this phony purported client.

Intruding into this Law Society of Ontario dog and pony show are some serious facts that destroy the law society’s credibility to deal with apparent money-laundering by legal club member lawyers.

For instance, Law Society of Ontario Treasurer Paul Schabas was co-counsel with corrupt Fasken lawyer Gerald L. Ranking on a civil case where Ranking went wild with criminal misconduct. Schabas at the time was a bencher and a member of the law society’s discipline committee. (See ‘Paul Schabas and Canada’s Corrupt Bay Street Lawyers‘ for details and supporting court exhibits.)

What did Paul Schabas do when he learned that Gerald Ranking’s purported client in a civil case was actually a non-existent fictional creation?

Nothing. Absolutely nothing. Nada. Zilch.

What did Law Society of Ontario bencher Paul Schabas do when he learned that Gerald Ranking had received about a million dollars in a trust account for his ficticious non-existent client?

Paul Schabas and his law society knew that lawyer Gerald Ranking of Fasken Martineau DuMoulin LLP’s Toronto office fraudulently claimed that his purported client was a registered Barbados business – when in fact the ‘company’ was a phony non-entity conjured up to deflect liability from Ranking’s actual clients. Schabas and the law society also knew that Ranking received over a million dollars court costs payments in the name of the phony ‘company’ that Ranking knew didn’t really exist – a badge of money laundering.

What did Paul Schabas do when he knew that the million dollars could not possibly be deposited to the credit of the fake ‘business’ that the court awarded it to?

Nothing.

So you see… Law Society Treasurer Paul Shabas and the Law Society of Ontario cannot be trusted to administer, investigate and discipline lawyers who violate anti-money laundering rules, including the ‘know your client’ provisions.

And that was just one case.

According to the Toronto Star’s Broken Trust investigation, in the last few years the Law Society of Ontario covered up and whitewashed hundreds of crimes by lawyers who committed criminal offences against their clients.

And now the Law Society of Ontario is proposing minor changes to the anti-money-laundering rules that will do little to stem the problem of money-laundering lawyers – the “servants in the architecture of corruption.”

It is time to bring Canada’s legal profession into compliance with modern standards of transparency, independent oversight and external accountability.

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