The president of the Canadian Bar Association told the Guardian Monday that the federal government in Ottawa had “agreed that (legal professional) privilege is constitutionally protected and fundamental to any conception of the rule of law.”
Simon Potter was responding to questions put to him on the issue which is making its way slowly through the courts in both Canada and The Bahamas. Bar Associations in both countries are involved in challenging laws they say breach the right of lawyer-client confidentiality.
The issue arose when the Organisation for Economic Co-operation and Development launched a campaign during the 1990s to combat the misuse of financial systems through criminal activities such as money laundering, tax evasion and terrorist financing. The OECD consists of 30 industrialised nations in Europe, North America and the Pacific The initiative was aimed primarily at tax havens like The Bahamas, in what many analysts said was an attempt to drive them out of business in order to protect the tax base of OECD nations. Most of these countries have aging populations and costly welfare systems to support.
In response, the Bahamas government passed a package of financial laws that tightened regulation of the financial services sector. Financial service providers had to scramble to conform to the new realities and stay in business.
“A key element in the fight against money laundering and the financing of terrorism is the need for countries systems to be monitored and evaluated,” says the OECD’s Financial Action Task Force. It calls for measures to identify and trace laundered money and to ensure that secrecy laws do not hinder the process.
Since lawyers maintain accounts, form companies and make transactions on behalf of their clients, they also come under the FATF guidelines. But lawyer-client privilege is seen as a fundamental right in British common law.
Under the Bahamian regulations now in place, attorneys are required to collect information on their clients and provide it to government inspectors. The actual job of inspecting has been delegated to a list of chartered accountants, and attorneys are required to pay the accountants’ fees for conducting the inspection.
According to former Bar Association chief Dr Peter Maynard, “the attorney cannot render effective professional service unless there is full, unreserved, and confidential communication between him and his client.”
Dr Maynard was responding to a recent demand by regulators for all law firms to be inspected by the end of July. The lawyers say such inspections should not take place, if at all, until the issue of legal professional privilege is decided by the court. The Court of Appeal is expected to rule next week on an injunction to prevent inspections.
The situation in Canada is very similar. Federal money laundering legislation required lawyers to report “suspicious transactions” and not to tell the client about the report. Law suits were filed to have this provision struck down as a violation of privilege.
According to Mr Potter, the Canadian Bar Association persuaded the government to implement a nation-wide stay exempting lawyers from the provision until a judgment on the merits of the issue of privilege was made.
Since then the government has agreed to drop the provision altogether.
“Though we do not know how Canada will comply with undertakings being made at the OECD meetings, we believe our government has agreed that requiring lawyers to rat on their own clients is a violation of a fundamental value, Mr Potter said in an email.
“The Minister made it clear that he still insists on a regime which would apply to lawyers, though respectful of the privilege. We have said we will be there at the negotiating table.”
Source: The Nassau Guardian
