Lawyers in British Columbia have won an interim judgement absolving them from complying with the Ottawa’s new anti-money laundering regime.

In her decision granting temporary relief, the Honourable Madam Justice M.J. Allan wrote, “While the Government’s goal of deterring and prosecuting money laundering offences is laudatory, the fundamental values of the Constitution must be protected. “

Allan noted that the mandatory transaction reporting regulations authorize “an unprecedented intrusion into the traditional solicitor-client relationship. The constitutional issues raised deserve careful consideration by the court.”

She granted a temporary exemption from the legislation until the merits of the constitutional challenge can be determined. “They are entitled to an order that legal counsel are exempt from the application of the regulations pending a full hearing of the petitions on their merits.”

The case pits The Law Society of B.C. and the Federation of Law Societies of Canada against the Attorney General of Canada. The constitutional issue they raise is whether certain provisions of the legislation that impose duties on legal counsel are unconstitutional because they violate the protected right of an independent bar.

On November 8, regulations implementing certain provisions of the Proceeds of Crime (Money Laundering) Act, came into force. This imposes mandatory transaction reporting for lawyers, along with banks, brokers and anyone who handles large cash transactions.

The law societies seek to exempt lawyers from the force of that legislation, and they are challenging the constitutional validity of the legislation.