News 2008

15/12/2008 - MONEYVAL: RED ALERT ON AZERBAIJAN

At its 28th Plenary Meeting in Strasbourg, held between 8-12 December, the Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) raised once again its concerns regarding the deficiencies in Azerbaijan’s AML legislation.

The organism acknowledged Azerbaijan’s efforts for passing an AML/CFT law before the national Parliament. However, MONEYVAL considers that the current draft “does not comply in comprehensive manner with key international standards” and “calls upon Azerbaijan to further revise this draft law in accordance with those standards before completing the legislative process, and urgently to implement satisfactory and comprehensive AML/CFT legislation”.

Currently, Azerbaijan does not have any anti-money laundering legislation in place. Therefore, it is not surprising why MONEYVAL has called on its member States and other countries “to advise their financial institutions to pay special attention by applying enhanced due diligence to transactions with persons and financial institutions from or in Azerbaijan in order to address the ML/FT risks”. Certainly, this awareness shall be extended to other Designated Non-Financial Business and Professions such as lawyers.

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11/12/2008 – NEW FATF/MENA-FATF MUTUAL EVALUATION REPORT FOR QATAR: THE LAWYER’S PERSPECTIVE:

The Middle East and North African Financial Action Task Force (MENA-FATF) and the Financial Action Task Force (FATF) have released their mutual evaluation report on Qatar. The report discusses a wide range of issues in relation to the prevention of money laundering and counter terrorist financing activities in Qatar.

Client Due Diligence:

The report calls for the legal profession to face tougher client due diligence requirements. Although lawyers in Qatar are required to verify and identify their clients, both corporate entities and individuals, the report states that these requirements are insufficient; the report calls for increased due diligence to be applied to cover the identification and verification of the beneficial owner and for due diligence to be regarded as an ongoing requirement throughout the client-lawyer relationship. Moreover, the report calls for enhanced provisions relating to:

1. Obtaining information on the purpose and intended nature of all business relationships undertaken by a legal professional;
2. Higher risk categories of client to face more stringent due diligence checks and for the legislation to include enhanced checks for unusual transactions;
3. A timescale by which client due diligence should have been carried out by and a detailed account of the penalties a legal professional will face if he fails to complete satisfactory client due diligence checks;
4. A more detailed record of client transactions should be kept.

Suspicious Transaction Reporting (STR):

The report also criticises the reporting requirements relating to the legal profession. The report expresses that there is avid confusion over the process of reporting any transaction suspected of being related to AML/CFT in relation to the current legal profession privilege rules in existence. It has been expressed that the current rules relating to STR and legal professional privilege has placed lawyers in a confusing situation; a STR would clearly breach the current requirements of confidentiality, however, many legal professionals believe that they must make a STR in order to avoid to be treated as an accomplice in a potential ML or FT scheme.

The report therefore calls for lawyers to have ‘immunity’ from incurring liability (in relation to breaching legal professional privilege) when making a STR.

The report states that the AML Law should include the offence of tipping off in relation to Designated Non-Financial Businesses and Professions (DNFBPs), including lawyers; in particular, they should take into account a prohibition from disclosing the fact that a STR has been made and that information related to the STR has been provided to the Financial Intelligence Unit.

The mission recommended conducting training session to train employees on matters and obligations relating to AML/CFT and called for improved regulation of the legal profession to ensure their compliance with AML/CFT requirements.

A full copy of the report is available here.

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24/11/2008 - HONG KONG LAW SOCIETY IS EXPECTED TO FURTHER CLARIFY ITS ANTI-MONEY LAUNDERING RULES

The South China Morning Post has reported that the Law Society of Hong Kong has decided to publish a clarification on its anti-money directive introduced last year imposing both mandatory and advisory procedures upon its members in identifying clients.

The Law Society of Hong Kong is prompted by the recent public release of the letter sent in this August to the Society by Privacy Commissioner Roderick Woo Bun, in which he said his endorsement of the Law Society’s anti-money laundering directive only extended to situations where there was a risk of money laundering. He urged solicitors to make their own judgment as to when copies of identification documents of their clients should be kept. This letter was not publicly circulated until November 20, 2008 though the letter concluded with a request that lawyers should be told about his stance.

Michael Lintern-Smith, who chairs the Law Society’s anti-money-laundering committee, said the directive was never intended to require collection of identification in all circumstances. However, he acknowledged that the directive may have caused confusion.

Source: “Rules on money laundering clarified; Law body aims to end members’ confusion”, The South China Morning Post, 21 November 2008.

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24/11/2008 – UGANDA PREPARES ITS ANTI-MONEY LAUNDERING LAW

According to the Ugandan Ministry of Finance, the proposed draft has been approved by the Cabinet and will be filed before the Parliament for discussion soon. The passing of this law will bring Uganda into current global trends in combating money laundering and financing of terrorism. The legislation appears to focus on preventing money laundering in the financial sector with no specific mention to lawyers at this stage of the draft. We will continue monitoring the development and contents of this bill.

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21/11/2008 – NEW FATF/MENA-FATF MUTUAL EVALUATION REPORT FOR U.A.E.: THE LAWYERS ISSUE

The Middle East and North African Financial Action Task Force (MENA-FATF) and the Financial Action Task Force (FATF) have released their report for this year’s mutual evaluation to the United Arab Emirates. The report calls for the imminent action on a diverse range of issues in order to prevent money laundering dangers in this country.

The report makes different remarks regarding the current situation of lawyers in the Emirates. Although some U.A.E. officials have indicated that a correct interpretation of AML laws would include lawyers as covered professionals for AML purposes, the view of the FATF mission is that they are not currently captured by such legislation. According to the report, lawyers and accountants are not covered “as they are categorized as professions under both the Commercial Code and the Civil Code. In these statutes “Professions” include lawyers and accountants and are separately defined from “other financial and economic establishments”. Accordingly, for lawyers and accountants to be covered under AML or CFT law, professions should be separately defined in the law. In addition, the Ministry of Justice has not issued any AML/CFT requirements for lawyers”. The only exception are those lawyers practising as “Ancillary Service Provider” who are registered with the Dubai Financial Services Authority, as they will have different applicable rules.

The report also points out that lawyers practicing in the Emirates are subject to the Lawyers Act, but this law does not require any client due diligence or record keeping measures. In fact, the report acknowledges that many legal professionals in the U.A.E. expressed “that if they were obligated to file suspicious transaction reports (STRs), they would find it difficult as it would breach their legal professional privilege or professional secrecy”.

The mission has recommended to U.A.E. authorities to add “professionals” to the AML law as a category of persons to be covered by the requirements to the law so that lawyers are clearly brought within the legislative framework for STR reporting. Also, once lawyers are covered by the provisions of the AML law, it will be required any agreement on which law of privilege will apply to lawyers operating in both the Dubai International Financial Center and Dubai Financial Services Authority. The mission urged domestic professional regulators for lawyers to implement regulations requiring lawyers to file STRs when they engage in the activities identified in the FATF Recommendations.

The mission recommended conducting consultation, training, and outreaching for lawyers to properly interpret and apply legal privilege when monitoring and filing STRs.

A full copy of the report is available here.

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28/10/2008 – RWANDA PARLIAMENT PASSES ANTI-MONEY LAUNDERING LAW

The New Times (Kigali) has reported that the AML bill has been passed by both the Lower and Upper Chambers of Parliament. The law will include the establishment of a national financial intelligence unit charged with receiving, processing, analysing and disseminating information in relation with suspected money laundering transactions.

Rwanda has been awaited this law for long due to the different threats that currently faces regarding money laundering and financing of terrorism. At this time, we do not have information on whether the law will directly include lawyers. We will continue monitoring this development.

Source: “Rwanda: Money Laundering Law Passed”, The New Times Kigali, 28 October 2008.

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