By Anita Rice


Government plans to introduce a new tipping-off offence within the Proceeds of Crime Act 2002 (POCA) will unnecessarily constrain the giving of legal advice and restrict access to justice, according to the Law Society, which - together with the Bar Council - is challenging the move.



The Home Office launched a last-minute consultation in August seeking views on whether to amend POCA and the Terrorism Act 2000 (TACT) to bring domestic legislation in line with the third EU money laundering directive, which will be implemented in December.



The move came as a surprise to professionals, given the Treasury took the view in its 2006 consultation that no further amendments were needed to either POCA or TACT to fully implement the third directive.



Current legislation allows solicitors, in certain circumstances, to disclose to a client, or their client's representative, that a money laundering report has been made about them, or another party, without committing a tipping-off offence. These exceptions include where the solicitor does not know, or suspect, that disclosure would prejudice an investigation or where disclosure takes place in connection with giving legal advice or with legal proceedings.



The proposed changes threaten to remove this legal professional privilege exception and absolutely prohibit anyone in the regulated sector from simply disclosing the fact a report has been made, by either themselves or someone else, regardless of whether or not disclosure would prejudice any investigation.



David McCluskey, a money laundering law specialist and partner at London firm Peters & Peters, said: 'The proposals effectively prohibit providing legal advice about the consequences of a report, even in circumstances where giving that advice would be extremely unlikely to prejudice an investigation.'



Lawyers fear the plans would render them unable to advise clients on, for example, commercial transactions with third parties who the lawyer knows to be the subject of a report. Those found guilty of tipping-off offences face up to five years in jail.



Alison Matthews, money laundering reporting officer at Irwin Mitchell, said: 'Our core duties require us to uphold the rule of law and the proper administration of justice, and act in the best interests of our clients. It is difficult to see how we can achieve both if this new offence is introduced.'



A Law Society spokeswoman said: 'We are extremely concerned that this proposal would seriously constrain solicitors' ability to properly advise their clients and force them to keep their clients in the dark. We are lobbying to ensure such fundamental client protections are not swept away.'



The Home Office said it will consider all consultation responses and finalise the regulations in due course.