TARGET LAWYERS, JEWELLERS UNDER MONEY LAUNDERING LAW: REPORT

Canada's lawyers need to be included in upcoming amendments to the
law against money laundering and terrorist financing, a newly
released Senate committee report concludes.

The interim report of the Senate's banking, trade and commerce
committee also recommends jewellers be added in the Conservative
government's promised changes to close loopholes in controls of
illegal financial transactions.

"The committee feels that, given the mobility of money and the
probability that those seeking to launder money and finance terrorist
activities will go to the country of least resistance, Canada must be
- -- and must be seen as -- an unreceptive country within which to
undertake these activities," concluded the report, titled: Stemming
the Flow of Illicit Money: A Priority for Canada.

The recommendation to bring the legal profession under the
legislation will be the most controversial, as Canadian lawyers have
already said they are bracing for a fight if they are forced to
report large cash payments from clients to a federal anti-money
laundering agency.

The committee was told the prospect was unacceptable because it would
contravene solicitor-client privilege. Appearing to straddle the
fence on the issue, the senators recommended that ongoing government
negotiations with the Federation of Law Societies continue and that
reporting requirements should respect solicitor-client privilege.

Finance Minister Jim Flaherty has already signalled that he intends
to introduce legislation, possibly this fall, to toughen existing
federal laws against terrorist-group financing and money laundering
in order to bring them up to international standards.

The Senate committee document said Finance Department officials told
senators that media reports and a task force on money laundering have
concluded that the voluntary measures "put in place by the legal
profession fail to meet international standards."

Lawyers suspect the government intends to eliminate a concession they
secured more than three years ago, when the then-Liberal government
exempted the legal professional from dirty-money legislation that
required financial institutions and other intermediaries to report
suspicious cash transactions and those involving more than $10,000 to
a government agency called the Financial Transactions Reports
Analysis Centre of Canada.

The committee was told by the RCMP, the Justice Department and others
that the lawyers' exemption from the law is a major gap or loophole
in the fight against dirty money.