Senate committee recommends widening of money-laundering law

Lawyers have long objected to provisions that would force them to blow the whistle on questionable actions by their clients, and they won an exemption in court. They argued they can handle any problems by self-regulation.

The Senate committee, though, argued that loophole should be closed, saying the government and law associations must work out a way to do that while respecting traditional lawyer-client privilege. Negotiations on the issue have been going on for some time.

"We are urging them to speed up the process," said Senator Jerry Grafstein, the committee chairman and a lawyer himself. "To my mind, it's a huge priority."

The report called money laundering is a significant problem.

"No one could give us a definitive answer about the value of money-laundering and terror-funding transactions in Canada each year," Grafstein said. "The criminal mind is an agile and creative one, so legislators have to constantly review and update our laws to keep pace.

"After we close one loophole, they find a new way to manipulate the system."

In its last annual report, Fintrac said it had turned over 142 suspicious cases to police agencies or the security service. The cases involved more than $2 billion.

The present law requires organizations and people who handle major transactions - from banks and credit unions to securities dealers, foreign exchange dealers, real-estate firms and even casinos - to keep tabs on who is using their services and report questionable transactions.

They must also report any electronic international transfer of more than $10,000 and any cash transactions over $10,000.

The report says jewellers should also have to report suspicious cash deals over $10,000.

As conventional money-laundering avenues are closed, crooks may turn to precious stones and metal - valuable and easy to hide, says the document.

Grafstein said the senators were concerned about balancing the right to privacy against the need to stifle the flow of dirty money.

During the committee hearings, Raymond D'Aoust, the assistant privacy commissioner, described the money-laundering law as "inherently intrusive."

"It treats everyone as a potential suspect," he said.

The report recommended that when Fintrac forwards information about questionable deals to law agencies in other countries, it should deal only with those countries that have privacy laws similar to Canada's.

The next step in the process of updating the money-laundering laws is for the government to present proposed amendments, Grafstein said. He said the senators will study those changes carefully.

"This is a problem of international consequence."

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