There is plenty of backstage manoeuvring in the development of legal policy. Often the most interesting work cannot be written about, to protect the confidentiality of our members’ views or our interaction with outside bodies. At the same time, I think: ‘But the wider legal profession should know about this!’
This week, I shall use film dogs - yes, film dogs - as the theme to start and end this piece. I shall begin in the role of Toto, the little mutt in ‘The Wizard of Oz’, to lift the curtain on the background to money laundering policy. In the process, I shall reveal that the supposed wizardry of the Financial Action Task Force (FATF) - responsible for the international legislative framework on the topic - is nothing more than an old man projecting imaginary terrors onto a large screen.
I have written before about the task force’s intention to find the evidence (what they call the typologies) behind lawyers’ involvement in money laundering. At the time, I welcomed a properly drafted report which would be of use in the neverending debate about the lawyer’s role. I have also in the past written that the part missing from the money laundering framework is any evidence of lawyers’ unwitting involvement in money laundering. ‘Unwitting’ is the key word. If the lawyer is wittingly involved, there are criminal laws and professional rules to deal with the position, and we would have no need for special money laundering provisions relating to lawyers.
What is more problematic is the supposed unwitting involvement of lawyers in money laundering. The whole draconian framework of suspicious transaction reporting and due diligence is based on the unproved notion that there is unwitting involvement on such a scale as to justify an intrusion into the principle of professional secrecy, together with a requirement for cumbersome bureaucratic procedures in law firms. But where is the evidence?
Finally, the FATF has come up with a ‘Draft report on money laundering and terrorist financing vulnerabilities of legal professionals’. It is confidential, and so I cannot share its content with you. There was a meeting on 14 May in London with representatives of the worldwide legal profession (for instance, the American Bar Association, the International Bar Association, the Federation of Law Societies of Canada, and the Council of Bars and Law Societies of Europe). It is interesting to note that these bodies have all responded with criticisms. By the way, you can find out much of what the report says in general by reading the American Bar Association’s (ABA’s) letter of response.
First, there is an almost entire absence in the report of cases of unwitting lawyer involvement. There is little point in a report full of witting cases, because it has no benefit for the overwhelming majority of the legal profession. It is obvious that the legislative framework of suspicious transaction reporting and due diligence has not been enacted for the witting actors, since they are criminals and will in any case ignore it. We want examples of unwitting involvement – and we have not really got it. That is a wasted opportunity.
The ABA’s letter mentions two other matters: first, the draft report comments favourably on the contribution that suspicious transaction reports have made to law enforcement in a few jurisdictions, but the evidence in the USA – and I believe in the UK, where the Serious Organised Crime Agency is swamped by reports – shows the opposite to be the case; second, there are misgivings that important principles of lawyer conduct (professional secrecy and an independent bar) are not appropriately represented in the report – I have written before that such matters are usually seen by the FATF as obstacles to law enforcement rather than guarantees of freedom and democracy.
So I shall end by hoping that Lassie, the dog that saved so many situations from disaster in films and on TV, will come racing over the horizon, bearing in its teeth a useful final report which concentrates on unwitting cases, and which recognises the role of the important fundamental principles of the legal profession.
STOP PRESS: The European Court of Human Rights has just announced its decision in the Monaco case (34118/11), which concerned a complaint by the Monaco Bar that the requirements of its own money laundering legislation breached articles of the European Convention on Human Rights. The court ruled that the bar was not itself a victim, and so the substance was not considered further.
Jonathan Goldsmith is secretary general of the Council of Bars and Law Societies of Europe, which represents about one million European lawyers through its member bars and law societies. He blogs weekly for the Gazette on European affairs