Lawyers and Notaries Under Scrutiny: A Growing Concern in the Fight Against Money Laundering

The European Union’s Directive (EU) 2015/849, aimed at preventing the misuse of financial systems, requires legal professionals to apply customer due diligence measures in certain transactions. A recent report has highlighted the significant role that lawyers and notaries play in the money laundering and terrorist financing process.

The Unwitting Accomplices

Lawyers are often unwittingly used by criminals to launder money, as their involvement can add respectability and an appearance of legitimacy to illegal activities. Additionally, the services provided by lawyers, such as setting up companies and trusts, can facilitate money laundering schemes.

Exposed to Risk

Notaries and lawyers are highly exposed to the risk of money laundering and terrorist financing due to their access to sensitive information and their ability to provide legal advice on complex financial transactions.

Croatia’s Experience

In Croatia, a recent survey found that 41% of law companies and lawyers reported being obliged to implement measures prescribed by the country’s Anti-Money Laundering and Terrorist Financing Law. However, the report noted that many lawyers were still not adequately trained or supervised in their AML/TF obligations.

Regulatory Action

The Financial Inspectorate filed four indictments against lawyers for violating AML/TF regulations between 2014 and 2018, citing irregularities in determining the beneficial owner, data and records keeping, due diligence measures, risk assessment, STRs, and monitoring.

High-Risk Transactions

According to the data collected by the Financial Inspectorate, the transaction that held the most risk was assistance in planning and conducting transactions related to the purchase and sale of real estate.

Conclusion

The role of lawyers and notaries in money laundering and terrorist financing is a growing concern that requires immediate attention from regulatory bodies and law enforcement agencies. It is essential to educate legal professionals about AML/TF risks and obligations to prevent them from being used as unwitting accomplices in criminal activities.