MONEY LAUNDERING: Americans may breach rules if they advise clients in Britain


US lawyers visiting Britain should be cautious about advising clients here, whether they are American or not, for fear of breaching UK anti-money laundering regulations on transactions that may be subject to suspicious activity reports (SARs), a leading US lawyer has warned.



Jim Roselle, associate general counsel at global finance corporation Northern Trust and a member of the American Bar Association (ABA) money laundering task force, said: 'I think it is potentially dangerous for a US lawyer visiting the UK even to give advice just because you will probably be subject to the rules here.' He was speaking after a conference held by the

ABA's international section in London last week.



EU countries have passed laws implementing recommendations agreed by the Financial Action Task Force (FATF) - a 33-member international body set up to combat money laundering and terrorist financing. In the UK, failing to report suspicious activity by a client or continuing to act on regulated transactions where a SAR has been filed can lead to a criminal conviction and up to five years in prison.



Louise Delahunty, a partner at City firm Simmons & Simmons and chairwoman of a money laundering session at the ABA conference, said: 'American lawyers visiting the UK should still be able to advise their international clients as UK law has the legal professional privilege carve out. The difficulty arises if they become involved in taking steps in a property or commercial transaction involving criminal property, which may engage the obligation to report.'



The US agreed the FATF recommendations in principle but has not imposed reporting requirements on lawyers. Mr Roselle said it is unlikely the US will introduce comparable legislation because it compromises legal professional privilege in certain circumstances.



'It is an inappropriate intrusion into the lawyer/client relationship and the duty of loyalty and confidentiality to the client... Lawyers in the ABA have to be constantly vigilant in articulating why it is inappropriate to force lawyers to make reports,' he said.



Stephen Revell, a partner at Freshfields Bruckhaus Deringer who spoke at the conference, said the reporting requirements 'surprised most Americans, especially as it could also give them problems with their own bar rules in terms of client confidentiality and privilege'.



He added: 'I do not have figures but am confident that the aggregate cost to UK law firms [of compliance] is well in excess of what the Assets Recovery Agency recovered last year.'



Law Society chief executive Des Hudson, also at the conference, said: 'The government will need to demonstrate... the costs of these regulations are proportionate and translate into a more effective money laundering regime, particular as a new raft of regulations is set to come into force in December.'



A Serious Organised Crime Agency spokesman said: 'The information contained in SARs continues to be valuable and is made available to a full range of law enforcement agencies. The SARs regime contributes to a range of outcomes, such as the building of intelligence on criminals and terrorists, criminal convictions and asset recovery.'



Anita Rice