It has long been a complaint from the National Criminal Intelligence Service (NCIS) that solicitors do not pr ovide enough tip-offs on clients who are suspected of money laundering.In annual report after annual report, the NCIS has said that just a fraction of its tip-offs come from the professions.

To reinforce the point, in August it released an unclassified version of its annual strategic threat assessment on organised crime for the first time, and warned that solicitors and accountants continue to play a significant role in money laundering.

It said: 'Professional firms need to know that they are a potential target for misuse by criminals.'In response, Louise Delahunty, a partner at London-based Peters & Peters, which specialises in cases involving charges of fraud, and chairwoman of the Law Society's serious fraud and money laundering taskforce, said at the time: 'The calls that come in to the Law Society indicate that the profession is very alive to the problem.

I think the majority of solicitors are conscious of their obligations, and non-contentious solicitors are increasingly streetwise.

Those who are being used by their clients would be a small minority.'The major dilemma solicitors face - as outlined to NCIS and the Metropolitan Police fraud squad at a recent fraud seminar organised by the Office for the Supervision of Solicitors - relates to professional privilege, even if legislation has made some inroads into this.A threat to this is coming from the second money laundering directive, which is currently before the European Parliament.

Under European Commission plans, the directive would extend reporting obligations to all stages of advice, including initial advice which is currently exempt.However, at a Council of Ministers meeting last month, a compromise text was adopted which adds to the exemptions from reporting: '.

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information [independent legal professionals] receive from one of their clients or obtain on one of their clients, in the course of ascertaining the legal position for their client.'Nonetheless, it seems that the directive will require lawyers to report information about money laundering obtained from their clients in the course of private consultations while planning or carrying out financial transactions where legal proceedings are not involved.The compromise followed lobbying from the UK government, which in turn was persuaded of the case by the Law Society.

If adopted by the Parliament - and there are signs of opposition - English solicitors will see little change in the money laundering reporting regime.

However, it is opposed by continental European lawyers, who currently do not face any reporting requirements.

The Council of Bars and Law Societies of Europe - which represents Europe's lawyers - is opposed to breach of client privilege and confidentiality under any circumstances.So how do solicitors avoid being involved in a fraud, scam or money laundering? The Law Society has produced a guide to help solicitors.

General precautions include keeping solicitor-client account details private until the appropriate time and mentioning money laundering in an initial client care letter.

This might deter possible fraudsters, as might an identification requirement.There are some obvious signs, but not every money launderer walks into his solicitors' office with a suitcase bulging with notes to pay their latest fee note.

Secretive clients, or those with no discernible reason to use that particular law firm, should raise concerns, as should the client who asks solicitors to hold cash in their client account pending instructions or just to forward to a third party.

Transactions involving Caribbea n and Pacific countries known for not having strong safeguards against money laundering should also ring alarm bells.Best practice sees firms appoint a money laundering reporting officer and adopt a policy which could, for example, say that sums of more than a fixed amount will not be accepted in cash unless previous authorisation is given.Such precautions are worth taking; if the solicitor discovers that funds are subsequently claimed to belong to third parties, the repercussions, such as of constructive trusteeship, can involve lengthy court proceedings and an awful lot of bad publicity.-- For confidential guidance or a money laundering information pack, contact the Law Society's profession ethics division on 0870 606 2577.

See also the Guide to the Professional Conduct of Solicitors, 1999, eighth edition, as well useful guidance for the financial sector from the Joint Money Laundering Steering Group, tel: 01937 840233.