The colour of money

In a continuing series, Louise Delahunty, chairwoman of the Law Societys money laundering task force, discusses the ongoing battle to combat corruption from a response to the second Money Laundering Directive to an attempt to increase awareness among firms and highlight the augmented duties of the profession The Law Societys money laundering task force was set up in January 2000 to respond to the European Commissions proposed second Money Laundering Directive, to increase solicitors awareness of money laundering issues and to give guidance to solicitors about their duties.The provisions of the first Money Laundering Directive were implemented in the UK by the Criminal Justice Act 1993 and the Money Laundering Regulations 1993.

All solicitors are subject to the substantive law; the regulations affect firms carrying out relevant financial business, for example, investment business as defined by the Financial Services Act 1986.

The proposed second directive will expand the range of offences for which suspicious transaction reporting obligations arise.

The requirements to verify clients identity and to keep records will also be extended to apply to the work of most solicitors.

This initiative is part of a world-wide drive against organised crime and corruption, following increased concern at the levels of money laundering.

The UK, probably ahead of most of the rest of Europe in its implementation of the first directive, is taking a lead in relation to the draft second directive, and indeed goes further than the Second Directive in the proposed Proceeds of Crime Bill.

This Bill proposes to introduce a single money laundering offence (combining the drug trafficking legislation and the Criminal Justice Act regime) to impose an objective test for suspicion and to widen the scope of the duty to report offences beyond drug trafficking and terrorist money laundering to the laundering of the proceeds of criminal conduct.

While the Law Society supports the fight against crime, its view is that unreasonable and unnecessary burdens should not be imposed on solicitors firms at low risk.

For example, the regulations should not apply to firms that undertake only publicly funded work or to a one-off transaction involving less than 15,000 (approximately 10,000).

The task forces aim is also to influence where possible domestic and European policy to ensure that legal privilege and confidentiality are maintained to protect the interests of clients.

The task force maintains that the right balance should be achieved in legislation between the fight against global crime and access to justice.

Solicitors cannot practise effectively and gain the trust central to their relationships with clients if faced with excessively intrusive and impractical obligations.Since its inception, the task force has worked closely with the Law Societys Brussels office, the National Criminal Intelligence Service (NCIS) and the UK government.

The work has included: monitoring the draft Directive and suggesting amendments to MEPs and the government to ensure protection of legal privilege; working on the Law Society response to the Proceeds of Crime Bill; and issuing in July 2000 revised guidance on money laundering to every law firm.The task force is comprised of solicitors, an expert in white collar crime, staff representatives from the Law Societys ethics, law reform and international departments as well as from the Office for the Supervision of Solicitors.

The task force meets at least four times a year and more frequently if necessary.

MONEY LAUNDERING TASK FORCE FACT FILECHAIRWOMANLouise Delahunty is a partner at London white collar crime specialist firm Peters & Peters.

She is formerly a Law Society council member for Westminster and is a member of the Societys criminal law committee.

COMMITTEE MEMBERSPauline McBride, Law Society council member for EU affairsRobin Booth, solicitor at London-based Burton Copeland, previously a Crown Prosecutor in the confiscation unitChristopher Murray, head of criminal law at London-based Kingsley Napley, sits as a Crown Court Recorder, member of the Societys criminal law committee and a member of the Criminal Justice Consultative Council Roger Ede, previously policy adviser at the Law Society on criminal law and now in the Societys international teamChe Odlum, Law Societys Brussels OfficeAlison Matthews, investment business executive in the Law Societys professional ethics departmentSophy Thomas, Law Society policy adviser on criminal lawMike Calvert, Office for the Supervision of Solicitorsl The Law Society through the money laundering and serious fraud task force and the Law Societys Brussels Office has been actively involved in lobbying the European Parliament.

For more information about the work of the task force, contact Sophy Thomas at the Law Society, 113 Chancery Lane, London WC2A 1PL.

For more information about the work of the Brussels Office, contact Che Odlum at 142-144 Avenue de Trevuren, B1150, Brussels, Belgium, tel: 00 32 2 743 8585, ore-mail che.odlum@lawsociety.org.uk