DISCLOSURE: Society successfully negotiates concession on proposed new offence


The government has stepped back from introducing a new 'absolute' tipping-off offence within the Proceeds of Crime Act 2002 and the Terrorism Act 2000, following intensive lobbying by the Law Society.



The Home Office had sought to remove the 'prejudice test' exception that allows solicitors to alert clients to the fact a suspicious activity report (SAR) had been made about them, or a third party, in certain circumstances so long as the disclosure would not be likely to prejudice an investigation.



However, the Law Society argued that absolutely prohibiting disclosure of money-laundering reports, regardless of whether it was unlikely to prejudice an investigation, would unnecessarily constrain lawyers in giving legal advice, restrict access to justice and compromise legitimate business deals.



President Andrew Holroyd welcomed the climb-down: 'We made giant strides from a position where the government proposed an absolute tipping-off offence with no scope for advising a client, to the current position which will enable solicitors, and others, to discuss SARs where this is unlikely to prejudice an investigation.'



In addition, Chancery Lane persuaded the Home Office to apply the tipping-off offence to lawyers carrying out regulated activities only. These include financial or property transactions, tax advice or trust and company formation.



Mr Holroyd said: 'The government accepted they had gold-plated the EU directive by applying the tipping-off offence to all work conducted by solicitors. If you are a solicitor who is not carrying out regulated sector work, from 26 December the tipping-off offence will no longer apply to you.'



Though there are still concerns the two Acts no longer cite legal professional privilege as a defence, Mr Holroyd said: 'The amendment is the result of intensive negotiations... Our view remains that privilege is non-negotiable and we had to ensure that the approach to tipping-off allows solicitors to advise their clients.'



A Home Office spokesman said: 'The Law Society worked closely with us in terms of proposing amendments before the statutory instrument was laid, giving consideration to achieving a compromise position. The introduction of the prejudice test resolved concerns around the tipping-off offence.'



The amendments to the two Acts come into force on 26 December 2007.



See also Cleaning Up



Anita Rice