Financial Crime World

Lawyers’ Role in Combating Money Laundering and Terrorism Financing

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In the fight against money laundering and terrorism financing, lawyers play a crucial role in ensuring compliance with regulations and reporting suspicious transactions. In this article, we will explore the responsibilities of lawyers licensed or authorized in Malta, EU Member States (including EEA States), or reputable jurisdictions.

Reliance on Third Parties

Lawyers may rely on third parties, such as banks or other financial institutions, to perform customer due diligence (CDD) on their behalf. However, it is essential to note that the ultimate responsibility for ensuring that the client is not engaged in money laundering or terrorism financing remains with the lawyer.

  • The third party must be a reputable entity and subject to similar regulations.
  • The lawyer cannot transfer their responsibility to the third party.

Reporting Suspicious Transactions

Lawyers are required by law to report any suspicious transactions related to money laundering or terrorism financing to the Financial Intelligence Analysis Unit (FIAU). This includes reporting any information received in the course of ascertaining the legal position for their client or performing their responsibility of defending or representing that client.

  • The attorney-client privilege and duty of professional secrecy are absolute and cannot be breached by reporting a suspicious transaction.
  • The exemption from reporting a suspicious transaction only applies when the information was received or obtained in the course of ascertaining the legal position for their client or performing their responsibility of defending or representing that client.

Criminal and Civil Indemnity

The Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR) provide criminal and civil indemnity to lawyers who report a suspicious transaction in good faith. This means that a lawyer cannot be held liable for breaching the duty of professional secrecy or any other restriction on disclosure.

  • The lawyer is protected from criminal and civil liability when reporting a suspicious transaction.
  • The protection applies only if the report was made in good faith.

Once a suspicious transaction report has been filed, a lawyer is generally allowed to proceed with providing legal advice or conducting a transaction. However, they must first ensure that no opposition has been made by the FIAU and that any attachment order has not been served on them.

  • The lawyer must verify that there is no opposition from the FIAU before proceeding.
  • The lawyer must also check for any attachment orders that may affect their ability to proceed.