Lawyers support measures to beat organised crime, but are frustrated by the new money laundering regime, argues Stephen Revell


The Proceeds of Crime Act 2002 (POCA) and the continually developing EU anti-money laundering regime (driven in turn by the recommendations of the financial action taskforce) are each a cause of grave concern for the entire legal profession.


Like many lawyers, I am in the invidious position of being wholly supportive of the broader objectives of combating organised crime and terrorism, and yet at the same time troubled and frustrated by the regime with which we need to comply. A regime that is so complex that some lawyers ignore it, while others over report and clog the system.



In this regard the Law Society's efforts of late are to be applauded, not only regarding the proposed intervention in relation to Bowman v Fels, but also for the prolonged and constructive debate that has been held with interested parties. The Society should have done more during the gestation of the legislation, but that's water under the bridge. For now the challenge remains to continue these endeavours - pushing for modifications to POCA and arguably most importantly pragmatism with regard to the proposed Third Money Laundering Directive. The watchwords should be 'deliberation' and 'proportionality'.


The issues associated with POCA are well rehearsed. There is a growing suspicion that for all the millions of pounds spent collectively on money laundering compliance, few convictions of organised criminals have been forthcoming. Rather one has the impression that the profession as whole has been turned into the vanguard in a second front against minor and almost inconsequential tax evasion. To achieve this lowly result some of the basic ethics of the profession have been swept aside.


The proposed Third Money Laundering Directive is a fine example of further treatment making the injury worse. The regime created by the Second Directive is yet to have bedded down. A few jurisdictions, such as France, have not yet fully implemented, and some that have (the Netherlands, for example) have served to create a pan-European regime with profound distortions and imbalances.


Above all there is a need for a measured approach to any further legislation and for a detailed and constructive dialogue to be held by the European Commission with interested parties including the Law Society and the International Bar Association. Has existing legislation had the desired effect? If not what is the answer that meets Europe's needs?


Alas, the helter-skelter push towards a new directive ignores the fact that (although helpful in parts) it has very obvious flaws - for example, in the areas of mutual recognition and the analysis of beneficial ownership. Moreover, inevitable 'gold plating', or widespread non-adherence, by member states will only exacerbate the so-called common market problems.


The Law Society should continue to make every effort to engage in a dialogue with the European authorities to press for harmonisation and for new European legislation to be governed by the mantra of proportionality and benchmarked against tangible achievements. Perhaps most pragmatically, it may be necessary to develop further a dialogue with the Treasury so as to use the implementing regulations to iron out the kinks in yet more tangled legislation.


Stephen Revell is a partner at


City-based law firm Freshfields Bruckhaus Deringer and chairman of the International Bar Association's money laundering directive implementation group