Lawyers’ Role in Money Laundering: A Delicate Balance between Secrecy and Responsibility

As the legal profession plays a crucial role in society, it is essential to acknowledge the significant risk that lawyers pose to money laundering (ML) and terrorist financing (TF) activities. The ease with which criminal organizations can access legal professionals, combined with the concept of professional secrecy and the right to a fair trial, makes lawyers particularly vulnerable to misuse.

Why Criminals Seek Out Lawyers

Experts identify three primary reasons why criminals seek out lawyers:

• A lawyer’s involvement adds respectability and legitimacy to any activity, making it more difficult for authorities to detect suspicious behavior.
• Lawyers provide services that can facilitate money laundering, such as setting up companies or trusts, or carrying out conveyancing procedures.
• Lawyers often handle customer funds, which can be used to “clean” dirty money.

The Legal Profession’s Role in ML/TF

The legal profession has a unique role in the ML/TF process, acting as third-party launderers who exploit legal loopholes and help criminals retain and legitimize their ill-gotten gains. Lawyers’ expertise is particularly valuable in setting up complex money laundering schemes, such as shell companies or offshore accounts.

Notaries at Risk

Notaries are also at risk of being exploited by criminal organizations. They often provide services that can facilitate ML/TF activities, such as opening bank accounts or conducting financial transactions on behalf of customers. The Financial Inspectorate has identified several irregularities in the notary sector, including inadequate due diligence and failure to maintain accurate records.

Accountants, Auditors, and Tax Advisors at Risk

Accountants, auditors, and tax advisors are also at risk of being involved in ML/TF activities. Their expertise is valuable in areas such as misuse of customer accounts or purchasing assets on behalf of clients.

Efforts to Monitor the Legal Profession’s Involvement in ML/TF

In Croatia, efforts have been made to monitor the legal profession’s involvement in ML/TF activities. The Financial Inspectorate has filed several indictments against lawyers and notaries for failing to implement adequate anti-money laundering measures. A significant proportion of respondents in a recent survey reported conducting business with high-risk customers, including non-residents from offshore zones or third countries.

The Importance of Balance

As the media, it is essential to highlight the importance of striking a balance between professional secrecy and responsibility. Lawyers have a duty to uphold the law while maintaining confidentiality with their clients. It is crucial that lawyers are aware of the risks associated with their profession and take steps to mitigate them. This includes implementing adequate anti-money laundering measures, conducting thorough due diligence, and monitoring client activities.

Conclusion

In conclusion, the legal profession plays a critical role in society, but it must also be mindful of its responsibility to prevent money laundering and terrorist financing activities. As the media, we will continue to monitor this issue and provide updates on efforts to combat ML/TF in Croatia and beyond.