Money laundering worries raised in case of B.C. lawyer who let client move millions through trust account

A Vancouver lawyer has been suspended after letting a client use her firm's trust accounts to move more than $14 million from other countries without providing any legal services or asking where the money came from.

In a disciplinary decision on the professional misconduct of Florence Esther Louie Yen, a hearing panel of the Law Society of B.C. raises the possibility she may have been unintentionally helping someone clean dirty money.

"This panel cannot definitively conclude that money laundering occurred, but it is not our role to make that determination," the July 21 decision reads.

"Nevertheless, if money laundering did in fact occur, it could not have happened without the participation and assistance of the respondent [Louie Yen], however inadvertent such assistance may have been."

Louie Yen has been suspended from practice for three months and ordered to pay costs of $35,209.83.

The decision says Louie Yen has promised not to repeat this behaviour, yet she still represents this particular client, which left the panel feeling "troubled."

It goes on to say that Louie Yen expressed concern about how difficult it would be for her Cantonese-speaking clients to find someone to represent them if she were suspended. The panel found it was more important to protect the public and deter others from following her example.

"The respondent ignored a multitude of obvious red flags. She utterly failed in fulfilling her duty as gatekeeper of her firm's trust accounts," the decision reads.

In an email, Louie Yen told CBC: "I fully accept the Law Society's decision and have learned much from this experience. I have taken numerous steps to prevent this ever happening again in my legal practice."

Money wired from Panama and Singapore

According to the disciplinary decision, the transactions all involved a client who is based in Hong Kong and initially retained Louie Yen to incorporate a numbered company to buy a restaurant.

The first suspicious transaction came in May 2015, when the client said he wanted to wire money to her firm's trust account because his uncle's foundation was interested in investing in real estate, the decision says.

A total of $604,770.16 was wired to the account, but the client soon revealed that his uncle's offer on the property was not accepted and the money would need to be returned. Louie Yen followed his instructions and remitted the funds, according to the decision.

This pattern continued over the next 22 months, with deposits coming from places including Panama, Singapore and a Singapore bank via Luxembourg, but the law society says Louie Yen did not ask about the source of the money or speak to her client's uncle.

"At the time of the first deposit, she did not know the uncle's name, the name of his foundation, whether the funds would be coming from the uncle personally or his foundation, the uncle's address, employer or occupation, his level of wealth or the origins of the funds," the decision says.

In all, $10 million US and $1.27 million Cdn were deposited into the account in 15 transactions, the decision says. Approximately all of that was then disbursed in 25 withdrawals or transfers.

These transactions raised eyebrows for officials at Royal Bank, who opened four inquiries over 18 months.

"Specifically, the bank wanted to know why a law firm was receiving money in trust that was intended as a gift between family members and why the money was coming via wire transfer from Panama," the decision says.

"The Royal Bank was suspicious of these transactions. The respondent apparently was not."

The law society's hearing panel notes that there was no real benefit to Louie Yen for allowing these transactions, but she breached her professional responsibilities repeatedly and was "at best willfully blind" to how her firm's trust account was being used.

In his 2018 report on money laundering in B.C., lawyer and former RCMP officer Peter German warned about the possibility of lawyers' trust accounts being "unwittingly" used to move dirty money.

Following the release of that report, the law society approved a series of new rules in an attempt to prevent money laundering, including one forbidding the use of trust accounts for anything that isn't directly related to legal services.