A 2022 unreleased FINTRAC report that was recently obtained by the Investigative Journalism Foundation (IJF) and CTV News suggests that Canadian lawyers are playing a major role in helping to facilitate organized criminal activities and in safeguarding the interests of different criminal groups. Some lawyers have even been identified as being connected to international criminal organizations, drug traffickers, illegal gambling rings, and money launderers, from narco-cartels to outlaw motorcycle gangs.
The FINTRAC report is based on an analysis of over 140,000 documents sent by banks and credit unions, about a variety of activity and different transactions between 2017 and 2021. It ranges from approximately $22 billion worth of transactions involving Canadian lawyers and organized criminal groups to over 200 cases in which information was forwarded to police and national security agencies where money laundering and terrorism financing was suspected. Then there were 92 disclosures where Canadian lawyers were operating on behest of organized criminal groups, including narco-cartels and outlaw motorcycle gangs, to help facilitate criminal activity.
One example listed in the report mentions how a Montreal businessman gave US $3 million to a Quebec attorney, cash which eventually made its way to a Colombian drug trafficker after going through intermediaries in the US, Panama, and Switzerland. What exacerbates the problem is that lawyers are not subject to Canada’s anti-money laundering laws, so are under no obligation to report anything to FINTRAC. As a result, FINTRAC’s ability to fully investigate lawyers is limited to third-party financial institutions.
Law societies provided a counterargument: that lawyers do report “suspicious clients” that attempt to solicit their legal services. But organized criminals are not approaching random lawyers. Organized criminals tend to have preexisting relationships with lawyers. Sometimes they are lawyers who willingly work to help further the interests of organized criminal activity. Other times they are lawyers who may have been coerced into providing their services. Neither situation is conducive to lawyers reporting the criminal activity to policing or public safety stakeholders. So, while lawyers may be reporting disorganized criminals and their disorganized criminal activities, there are levels to crime, with organized crime being called organized because it is organized and difficult to uncover.
Around the same time that the FINTRAC report was published to policing and public safety stakeholders, the Cullen Commission published their final report, which included findings related to their investigation into money laundering in British Columbia. The Cullen Commission’s final report labeled lawyers as “gatekeepers” and as possessing the knowledge, skills, and abilities necessary to help facilitate criminal activities. These comments also resulted in the Law Society of British Columbia creating a task force to explore rules around trust fund management and client identification. However, that task force is unlikely to explore the multitude of ways that lawyers are being leveraged to help further the interests of organized criminal groups beyond its current scope, beyond trust fund management and client identification.
David Eby Leads the Fight Against Organized Criminal Activity.
In May of 2019, British Columbia’s provincial government announced the establishment of the Commission of Inquiry into Money Laundering within the province, led by Justice Austin Cullen. Then-Attorney General David Eby was responsible for taking on the issue of organized criminal groups that were money laundering illicit proceeds of crime through British Columbia’s casinos, the real estate market, and big-ticket purchases.
Prior to that inquiry, many of Canada’s international partners had described Canada as having a secrecy culture. The US State Department published reports that highlighted Canada’s vulnerabilities, particularly in the real estate sector. European Union authorities stated that Canada was slow to adopt international financial regulations and standards, particularly related to anti-money laundering and counter-terrorism financing. The Financial Action Task Force (FATF) noted gaps within Canada’s anti-money laundering and counter-terrorism financing laws, particularly related to regulatory oversight and the need for greater enforcement powers. Even Former RCMP Deputy Commissioner, Peter German, who was commissioned by the provincial government for a report on money laundering in British Columbia, concluded that Canada provided favorable conditions for organized crime to thrive.
Once the Cullen Commission concluded in 2022, Justice Cullen’s final report highlighted the enabling role that different professions play in helping to facilitate organized criminal activity, especially lawyers. What made the final report so significant, considering that the linkage between lawyers and organized criminal groups had been first made over thirty years ago, is that it was the first time that the acknowledgement was made by a sitting judge. Furthermore, it influenced other countries to revisit the adequacy and efficacy of their anti-money laundering and counter-terrorism financing and the how they intersect with sectors outside of traditional banking, like real estate, legal services and accounting services.
More recently, British Columbia’s provincial government passed the Legal Professions Act to create a single regulator for legal professionals. The creation of a single regulator that oversees the activities of lawyers, notaries, and paralegals is a necessary first step to address some of the limitations in the current law such as legal professionals not being included in anti-money laundering legislation.
What seems to be getting lost in the debate around the Legal Professions Act is that Canada has previously attempted to cover lawyers in legislation: the Proceeds of Crime and Terrorist Financing Act. But law societies objected and were successful at arguing that it would violate solicitor-client privilege.
The Law Society of British Columbia has proceed with litigation against the Legal Professions Act, after Supreme Court Justice Miriam Gropper concluded that the balance of convenience did not favour an injunction at this stage. This will likely take between 18 and 24 months, commencing in early 2025. One thing to remember about this litigation is that the Foreign Interference Commission final report, including findings that might emerge related to the exploitation of power imbalances, foreign interference’s links to complex crimes, and how lawyers, accountants, and bankers are key professions that enable organized criminal activity, are likely to influence the proceedings.
Changing the View of the Legal Profession
If the mess around lawyers was not complicated enough, another series of events has been how investigative reporter, Sam Cooper, had been targeted by lawyers working for individuals and organizations he had reported on about organized criminal activities. These lawyers attempted to weaponize the courts, threatening Copper with lawsuits and more. Although the lawsuits were eventually tossed out, this was not the first time this strategy has been employed, as many others have reported similar situations, with the effects of this strategy being most devastating on the average Joe or Jane.
What makes Cooper’s situation unique is that the Foreign Interference Commission has been releasing information that validated his reporting, bolstering his court cases. It has also brought a realization that lawyers are inserting themselves in front of organized criminal groups and attempting to weaponize the courts to exploit people’s vulnerabilities.
Similar weaponization of legal services seems to have popped up in Ontario, where families and individuals have been defrauded and drained of their life savings after real estate developers halted the building of homes and refused to refund that money. A recent incident in North York saw investors fall victim to a syndicated mortgage fraud after the development project was halted. Their requests to get refunded were ignored and some even received threats from lawyers that were acting on behalf of their client, the real estate developer. Policing stakeholders did not seem to show any interest in policing the matter. But that same real estate developer at the helm of everything had been previously charged by Toronto police in a complex mortgage fraud scheme valued at $17 million. Those charges were eventually withdrawn, however.
One of the investors whose family was defrauded of their life savings, a husband and father of two young children, invested over $1.28 million of their family’s savings. Eventually they found out that the syndicated mortgage fraud involved two other real estate lawyers representing the syndicate. At some point, the father discovered that the money he and others had invested was not paid toward mortgages on the properties meant to secure the investment. The remainder of his family’s life savings were depleted trying to recuperate those funds in court. After that, the victim went to the real estate developer’s office where a dispute broke out, and the developer and his wife were shot and killed, then that husband and father killed himself.
After that tragedy in North York, there have been calls for Canada to reform how it handles syndicated mortgages and white-collar crime, but more problems are being traced back to lawyers. In the Greater Toronto Area there have been reports of lawyers having their offices shot at in relation to the tow truck industry—an industry that public officials have acknowledged as being influenced by organized crime.
Violence is never okay, the can of worms that has been opened by what Canadians are learning about the legal profession leads to different kinds of questions, like whether lawyers who get targeted are involved with organized criminal activity. These kinds of questions would have once been lumped in with other conspiracy theories, but the information coming out about the activities some lawyers are engaging in stretches beyond what any conspiracy theory could have imagined. If they are involved in helping further organized criminal activity, then they too belong in jail. How Canadians view the legal profession will never be the same again.
Limitations for Cabinet Privilege but not Solicitor-Client Privilege
Although there may be challenges to subjecting lawyers to a reporting regime from a constitutional perspective, given the importance of solicitor-client privilege that was noted in the Cullen Commission report, it remains to be seen whether every action a lawyer partakes in—such as a lawyer helping to facilitate organized criminal activity by creating companies, wiring money, transferring real estate and depositing money in trusts—with a client is deemed solicitor-client privilege. But courts have previously refused to acknowledge that there should be limitations to solicitor-client privilege.
Parliamentary cabinet privilege was once considered to provide blanket immunity for the discussion that occurred between the Prime Minister and their Cabinet. That is until the Justice Hogue of the Foreign Interference Commission ruled that cabinet privilege did not cover all interactions due to the overriding public interest in transparency, accountability, and effective governance. So the privilege of our elected officials has limits due to the public interest, but all interactions between solicitors and clients, even those helping to facilitate organized criminal activity such as money laundering, do not.