Isle of Man

Last updated: 13/03/2008

CENTRAL AUTHORITY FOR REPORTING

Isle of Man Constabulary – Financial Crime Unit

ARE LAWYERS COVERED BY MONEY LAUNDERING LEGISLATION?

Yes

NAME LAWS REGARDING ANTI-MONEY LAUNDERING PROCEDURES

The Criminal Justice Act 1990 (Section 17A- 17J) which covers the money laundering of all crimes;
The Prevention of Terrorism Act 1990 which applies to terrorist crime and funding together with the recently en-acted Anti-Terrorism and Crime Act 2003;
Drug Trafficking Act 1996 which applies to drugs money;
Anti-Money Laundering Code 1998 as amended in 1999 and 2001;
Anti-Terrorism and Crime Act 2003

IN ADDITION TO THESE LAWS, IS THERE ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS CURRENTLY IN PLACE?

In terms of anti-money laundering procedures, Isle of Man Advocates, insofar as they hold or manage client’s money or insofar as they conduct corporate and/or trust service provider businesses within their Advocate’s practice, are required to comply with the provisions of The Anti-Money Laundering Code 1998, as amended by The Anti-Money Laundering Code 1999 and 2001;
Anti Money Laundering – Guide for Member Firms Sept 2003 Edition Isle of Man Law Society;
Specimen Anti-Money Laundering Compliance Manual – Second Edition July 2002 Isle of Man Law Society;
Amendments to the Anti-Money Laundering Guidance Notes

UNDER WHAT CIRCUMSTANCES IS A LAWYER UNDER THE OBLIGATION TO REPORT?

Lawyers are under an obligation to report any knowledge or suspicion that another person is engaged in laundering the proceeds of criminal conduct where the information or other matter on which that knowledge or suspicion is based came to his attention in the course of his profession, business or employment (Section 17J Criminal Justice Act 1990).

An identical obligation but relating to a knowledge or suspicion that another person is engaged in drug money laundering arises under Section 48 of the Drug Trafficking Act 1996. A discretionary enabling power to disclose a suspicion pr belief that money or property is or derived from terrorist funds arises under Section 10 of the Terrorist Act 1990. It should be noted that the Advocates` profession is currently outside the definition of regulated sector for the purpose of section 14 of the Anti-Terrorism and Crime Act 2003.

It should be noted that the mandatory disclosure requirements under section 17J Criminal Justice Act 1990 and section 48 of the Drug Trafficking Act 1996 – each provide an exception that is not an offence for a professional legal adviser to fail to disclose any information or other matter which comes to him in privileged circumstances although no information or other matter should be treated as coming to a professional legal advisor in privileged circumstances if it is communicated or given with a view to furthering any criminal purpose. The definition of what constitutes information or other matters coming to a professional legal adviser in privileged circumstances is defined within the relevant statutory sections.

WHAT HAPPEN WHEN A LAWYER MAKES A REPORT

“Lawyer suspects money laundering so he makes a report under the procedures set up by his firm
Lawyer’s report is passed to the Money Laundering Reporting Officer who evaluates it – by considering all available information – and decides whether to make a formal disclosure to the Financial Crime Unit
If the MRLO makes a disclosure, FCU analyses the report and checks against its database for possible related information, prior to passing the details on for investigation.
The information is forwarded to the Police or Customs or other appropriate agency whose officers make discreet enquiries. An honest client will never know.
If the enquiries uncover a crime the investigators will serve a court order on Lawyer’s firm to provide the records they need in evidence. Lawyer’s suspicious report will not be part of the evidence.” 1

LAWYER RESPONSIBILITY/LIABILITY

In terms of anti-money laundering procedures, Advocates, insofar as they conduct any qualifying activity set out in schedule 1 to the Code, must comply with the provisions of the Code, and can face criminal prosecution under the Code for any breaches of the Code.

“Lawyer’s responsibilities:

To be alert to recognise activity that might be suspicious
To consider if someone else reviewing the same facts would say you had reasonable grounds for suspicion
To report promptly to your MRLO” 2

Advocates, insofar as they told or manage client’s money, or directly conduct corporate and/or trust provider service business, must comply with the Anti-Money Laundering Code provisions relating to client’s identification and verification.

The Anti-Money Laundering code requires an initial identification procedure to be operated and thereafter requires information to be verified if there is a substantial change in the pattern of dealings or in the event that there is a suspicion that the client may be involved in a money laundering offence

The Anti-Money Laundering Code requires:

To check firstly whether or not that client is an ID exempt Person; and, if not-
To obtain from that client the production of satisfactory evidence of his identity; or
To take such measures as are specified in the procedures as will produce satisfactory evidence of his identity.

“Lawyers must see evidence confirming that names given for individuals or organisations are their true names that they exist and they can be contacted at the address given.

Lawyer must also collect sufficient information to confirm the legitimacy of the client’s business and source of funds, and to understand enough about the nature of the business and the proposed use of his legal service so that unusual and potentially suspicious transactions may be recognised.
Careful checking of evidence of identify is to be carried out at the start of a business relationship and for any single transaction or series of transactions exceeding 15,000 euro” 3

Where evidence is not forthcoming within a reasonable time from the same being requested, no further steps should be taken on the matter and you should notify the MLRO that the client has failed to provide all the necessary information.

LAWYERS PROSECUTED FOR MONEY LAUNDERING OFFENCES

No information available

Information provided by:

Meoiryn Shee-Ellan Vannin, Isle Of Man Constabulary – Financial Crime Unit

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Sources

Anti Money Laundering – Guide for member Firms – Isle of Man Law Society pag.16
Anti Money Laundering – Guide for member Firms – Isle of Man Law Society pag.5
Anti Money Laundering – Guide for member Firms – Isle of Man Law Society pag.7