VANCOUVER — Ronald Pelletier, a Vancouver lawyer, was found by the B.C. Law Society to have assisted fraudsters in laundering over $31 million through his trust account between 2014 and 2018. He was disbarred in November 2023, the first lawyer in B.C. to face this penalty for money laundering. Pelletier’s activities included purchasing burner phones, using pseudonyms, and earning nearly $900,000 in legal fees for moving illicit funds.
A newly obtained report from the Financial Transactions and Reports Analysis Centre of Canada (Fintrac) suggests Pelletier is not an isolated case. The report, from 2022, indicates that Canadian lawyers play a significant role in money laundering activities. Fintrac’s analysis of transactions from 2017 to 2020, totaling nearly $22 billion, found lawyers facilitating deals with organized crime groups, drug traffickers, and fraudsters.
Between 2017 and 2021, Fintrac made 229 disclosures to police and national security agencies, indicating suspected money laundering or terrorist financing involving legal professionals. Of these, 92 cases connected the legal profession to professional money laundering schemes.
The report highlights how criminals use lawyers to launder money through real estate transactions, shell corporations, and trust accounts, often shielded by solicitor-client privilege. While these financial activities are typically legitimate, they can be exploited to obscure the ownership of assets and move illicit funds. Despite the high volume of suspicious transactions, lawyers are seldom criminally charged or disbarred for money laundering.
A 2024 Fintrac document notes that some “key enablers” among lawyers are linked to firms that openly advertise services used for laundering money. Fintrac’s findings are based on over 140,000 reports from banks and other financial institutions.
Michelle Gallant, a law professor at the University of Manitoba, emphasized the significance of Fintrac’s disclosures, indicating sufficient suspicion of wrongdoing. Michael Levi, a Cardiff University professor, noted that while not all lawyers involved in suspicious transactions are acting improperly, some behaviors highlighted in the report are “dodgy” at best.
Canadian lawyers are not subject to the same anti-money laundering laws as real estate brokers or banks, due to the protection of solicitor-client privilege and the independence of the legal profession. The Supreme Court of Canada affirmed this in a 2015 ruling, following resistance from law societies.
Provincial law societies have introduced measures to combat money laundering, such as limiting large cash payments and requiring lawyers to verify the source of clients’ funds. However, enforcement and penalties remain limited.
The B.C. government recently passed legislation to create a new regulator for legal professionals, capable of issuing higher fines for rule violations. This legislation has been contested by the Law Society of B.C., citing concerns over professional independence.
Despite improvements, Canada’s regulation of lawyers in relation to money laundering remains insufficient by global standards. The Financial Action Task Force (FATF) has criticized Canada’s regulatory framework, and its upcoming review may prompt further reforms.
Finance Minister Chrystia Freeland’s office declined to comment on potential regulatory changes. Gallant argues that the legal profession’s self-regulation must effectively address money laundering risks to maintain its independence.