Lawyers have reacted with concern to an inter-governmental report apparently suggesting that complicity in money laundering and terrorist financing is rife in the legal sector.

Money Laundering and Terrorist Financing Vulnerabilities of Legal Professionals, published by the Financial Action Task Force, a body set up by seven leading economies, presents a ‘typology’ of scenarios in which legal services are vulnerable.

While conceding that ‘the vast majority’ of lawyers seek to comply with the law, the report says not all professionals carry out proper due diligence and that different interpretations of professional privilege act as a disincentive to prosecution.

The report appears amid mounting concerns about the EU’s fourth anti-money laundering directive, which would tighten disclosure requirements.

In a letter to the taskforce last month, Evangelos Tsouroulis, president of the Council of Bars and Law Societies of Europe, criticised the report as being based on ‘hypotheses’. The result ‘lacks interest and has no pedagogical purpose,’ he said.

Desmond Hudson, chief executive of the Law Society, pointed out that the report deals with the position internationally: ‘Clearly, different nations must confront different standards and problems and responses.’

He said the profession’s effectiveness in combating money laundering ‘is well regarded both nationally and internationally’.