Yes, I'd be glad to.
As you mentioned, there was a recent British Columbia Court of Appeal decision on the application of the anti-money-laundering legislation to the legal profession. That decision made reference to potential problems that would arise out of sections 11 and 65 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, or PCMLTFA, as we like to refer to it.
In the government's view, the concerns raised by the court were about the potential implications of the act as drafted. They did not arise from the intentions that the government had in the original drafting of the act. The government decided that, since the the Court of Appeal found some ambiguity in the interpretation, these provisions should be clarified.
In the government's view, the goal is not to introduce substantive changes to the act, but rather to clarify the original intent. In particular, the proposed amendment to section 11 would clarify that reporting entities, those that have responsibilities under the act, would not be required to disclose any information to FINTRAC, the federal financial intelligence unit, that is subject to solicitor-client privilege. This amendment would clarify that this applies under all circumstances, including when FINTRAC is auditing the entity's compliance with its obligations under the act.
Similarly, with respect to section 65, allow me to give a little bit of background. Entities have requirements under the act. For example, they need to ascertain the identity of people with whom they are transacting business. They need to keep records of their transactions. Section 65 of the act as currently drafted allows FINTRAC, which is the regulator that administers these regulations and audits compliance with these regulations, to disclose non-compliance information to law enforcement for the purpose of a criminal investigation. The purpose of this is to assist in the enforcement of the PCMLTFA. This is done only in very serious situations where there is a possibility that there has been a criminal offence committed because of the lack of compliance with the provisions of the PCMLTFA itself. This is a pretty limited circumstance. There has to be very serious non-compliance with the obligations of the PCMLTFA for it to be a potentially criminal offence. There have been about 40 such disclosures since 2001, or about three or four per year.
These amendments would clarify what the government would argue has always been the intent. These disclosures to law enforcement of non-compliance with the obligations under the PCMLTFA can only be used by law enforcement to investigate potential criminal non-compliance with the PCMLTFA. The disclosures cannot be used to investigate any other crime that the person or entity being investigated under the PCMLTFA may have committed, or to investigate a crime that a client or counterparty of the person or entity being investigated under the act might be involved in.
