Solicitors could no longer be forced to report their clients to the authorities under anti-money laundering laws if a challenge to the second money laundering directive mounted in Belgium last week is successful.


At the request of the Belgian bar, a Belgian court has applied to the European Court of Justice (ECJ) for a ruling on whether reporting duties imposed on lawyers by the directive could breach the right to a fair trial.


If the ECJ rules that the requirements do breach citizens' human rights, the government may have to remove provisions requiring solicitors to report on their clients from the Proceeds of Crime Act 2002 (POCA). Such an ECJ ruling would also call into question certain provisions contained in the third money laundering directive which was passed by the European Parliament this summer.


Peter McNamee, legal adviser to the Council of Bars and Law Societies of Europe (CCBE), which is planning to intervene in the case, said: 'This is a very big development. We have been alerting institutions [for some time] that they could be violating citizens' rights.


'If the European Court of Justice decides the directive infringes article 6 [the right to a fair trial], the European institutions could have to reassess their whole money laundering strategy, and re-examine the legislation.'


He added: 'There is a right to consult a lawyer in confidence, and if that is tilted against the individual, that does not help a fair trial. This is an excellent opportunity for the European Court to examine the area of lawyers' reporting, and rule on it.'


Louise Delahunty, former chairwoman of the Law Society's money laundering taskforce and partner at London firm Peters and Peters, said: 'It would be of great persuasive influence for European bars to say to the European institutions that they will have to think again... which would have a trickle-down effect to national governments.'


Challenges to the requirements for solicitors to report on their clients are also underway in France and Poland.


A Law Society spokesman said: 'Safe guarding clients' right to legal professional privilege under the EU money laundering directives has been a priority for the Society. We are analysing the Belgian challenge to assess what relevance this may have for the UK regime.'