Doing Business in a World of Crime

By Mark Lemieux

In the Fall of 2025, I presented ongoing research at the annual conference of the Canadian Association of Legal Ethics in Winnipeg. I spoke to an audience of judges, law professors, law society officers and practitioners. The presentation focused on the need for legal professionals to detect and deter clients who use their services in the pursuit of illegal activities, such as fraud, money laundering, the financing of terrorist activities and the evasion of economic sanctions.

It does not come naturally to the mind of a lawyer or notary that their services can be instrumentalized by wrongdoers. Law students come to law school with noble sentiments. Upon graduation, they join established firms or start their own, with the sentiment that their services will bring a positive change in the lives of their clients. Most of my colleagues in private practice would dispute the suggestion that any of their “blue chip” clients would ever involve them in illicit shenanigans.

Yet, it has been demonstrated that the amounts of proceeds of crime laundered in Canada are staggering. The numbers are hard to pin down; money launderers do not disclose their financial statements. Reliable estimates exceed $10 billion annually.

Law societies occasionally stumble upon legal professionals who complicitly, recklessly or unwittingly assist money laundering activities of their clients. In one well-known case, a single lawyer helped launder $25 million in a short period of three months. That corresponds to a rate of $100 million annually. It would only take 100 lawyers laundering at that rate to assist in the laundering of all there is to launder in Canada in a given year.

The amounts involved in the financing of terrorist activities are much smaller. However, the damage inflicted by terrorism is on the same scale as the damage resulting from the drug trade and the other underlying criminal activities that generate proceeds. Recall, for example, that small amounts in the thousands of dollars financed the destruction of the World Trade Center in 2001, the killing of thousands of civilians and the resulting crater impact of terror.

Businesses Vulnerable to Money Laundering

Lawyers are just one of a variety of businesses and professions that are vulnerable to money launderers and financiers of terrorism. The term “vulnerability” means, in this context, that services offered by lawyers are attractive to wrongdoers. For instance, trust accounts provide a veil of anonymity under which incoming deposits of “dirty” funds are disbursed by way of “clean” drafts.

Financial institutions, including banks, credit unions and securities dealers, are among the businesses most vulnerable to money laundering. They offer a global range of domestic and international accounts and payment services. These services allow illicit funds to be integrated into the financial system and dispersed to erase their criminal origin.

There are many stories of “dirty” banks in history. My favourite is Riggs Bank in Washington, which offered safe accounts for infamous Central and South American heads of state in the 1980s. Other examples include the many banks caught in money laundering scandals from time to time. Most recently, TD Bank paid $3 billion in penalties and fines in 2024 to settle criminal charges.

Money service businesses, payment service providers, fiat money ATM providers, crypto exchanges and crypto ATM providers also come to mind. So do casinos, real estate brokers, and dealers in precious metals and jewellery. Every day, money launderers knock on the doors of these and other businesses to convert proceeds into crypto, gold bars or real estate investments.

With respect to the financing of terrorism, charities are particularly vulnerable. Among other reasons, they conduct their activities in high-risk zones with limited oversight.

The Canadian Proceeds of Crime (Money Laundering) and Terrorist Financing Act targets many businesses, professions and organizations that are vulnerable to money laundering or terrorist financing. The Act imposes duties intended to detect the instrumentalization of the services they offer and deter putative money launderers and financiers of terrorism. These duties include reporting transactions to a central agency and law enforcement agencies.

Fraud and Sanctions Evasion

In addition to money laundering and the financing of terrorism, frauds and scams threaten the integrity of legitimate businesses. In Canada, frauds and scams reportedly hit in excess of half a million Canadians and Canadian businesses to the tune of more than $1 billion each year.

Fraud is a three-victim crime. There is, of course, the scammed individual, business or organization targeted by one of many stratagems: romance fraud, fake bank representative fraud, identity theft, grandparent fraud, business email compromise and president’s fraud.

However, the fraudster’s hope is to move funds from the bank account of this individual, business or organization to another account controlled by the fraudster or accomplices. To successfully complete the crime, the fraudster must not only fool the initial account holder’s vigilance but also outsmart the security defences of the account holder’s bank and the other bank that holds the account where the funds are moved. Banks understand this and implement practices to flag suspicious movements of money out of or into accounts.

A lot of fraud and other illegal activity is conducted through businesses and professions that lie outside the scope of the Act. This includes sanctions evasion.

Many countries have adopted economic sanctions that prohibit trade in specific goods or services, or trade with named individuals or businesses in named countries, for a variety of purposes. Think of the sanctions against Russian or Iranian individuals or businesses. Sanctions evasion is the illicit activity that seeks to mask sanctions violations and give offending transactions a veneer of respectability.

The Risks of International Trade

Businesses and professionals involved in international trade are of special interest, because all risks converge: fraud, money laundering, the financing of terrorism and sanctions evasion. Vast amounts of illicit activity permeate international trade markets.

Domestic markets are not exempt from similar wrongdoing. Well-reported instances of price-rigging in public contracts illustrate this, including the contracts with municipalities highlighted in Quebec’s Commission Charbonneau and the criminal activities of the SNC-Lavalin engineering firm in connection with work done on the Jacques-Cartier Bridge and the CUSM hospital in Montreal.

What This Means for Businesses

What does this all mean to students at the Desautels? Any business engaging with any trading partner should assess the risk of fraud, money laundering, the financing of terrorism, sanctions evasion and other illicit activities. Businesses need policies and procedures to manage the risks they assess.

In particular, there need to be robust “know your customer” policies and procedures that extend to the ultimate beneficial owners of business counterparties and the source of funds for transactions. The idea is not to become paranoid and suspect all commercial dealings. It is to develop healthy business habits that allow the detection of bad actors and the avoidance of potential shenanigans.

The way business is conducted has evolved. It is no longer viable to trust opportunities and counterparties blindly.

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