Money Laundering: Treasury 'ignores' Law Society pleas for clarity on third directive rules


Solicitors have accused the Treasury of being 'irresponsible' by 'ignoring' their concerns over ambiguous provisions contained in draft money laundering regulations published this week, which could see lawyers inadvertently commit a criminal offence.



Despite protests from the profession, the draft regulations that will implement the third money laundering directive have failed to spell out exactly what identity checks will need to be made in relation to trusts.



The Law Society's representation arm wrote to the Treasury last week, calling on it to give a clearer definition of what is meant by the 'beneficial owner' of a trust (see [2007] Gazette, 18 January, 1). Solicitors will be obliged to carry out checks on all beneficial owners.



Taylor Wessing partner Toby Graham, who has examined the issue for Chancery Lane's money laundering task force, said the Treasury had 'completely ignored' solicitors' worries. He said: 'The fact that the government has failed to address the very serious concerns raised by the Law Society and others is extremely disappointing and frankly irresponsible.



'This is legislation which carries a possible criminal penalty, and it needs to spell out what solicitors must do to avoid that. At the moment people do not understand the concept of beneficial ownership [in relation to trusts].'



A Law Society spokeswoman said it would be lobbying MPs during the passage of the regulations.



In its consultation on the draft regulations, the Treasury said it noted the points made by legal professionals but rejected the assertion that 'the regulations should specifically state what [identity check] measures were needed and when they should apply'.



It said: 'The government considers that it is unhelpful to provide in the draft regulations different expectations for each possible situation. [It] expects supervisors or industry to develop guidance on what measures can and should be undertaken to meet the requirements imposed to ascertain the beneficial owner. The government will work closely with these bodies to ensure that the requirements and any subsequent guidance are as helpful as possible.'



Rachel Rothwell