Last Updated: 02/04/2014
CENTRAL AUTHORITY FOR REPORTING
Executive Service of the Commission for the Prevention of Money Laundering and Monetary Offences
(Servicio Ejecutivo de La Comisión de Prevención del Blanqueo de Capitales e Infracciones Monetarias – Seplac)
OTHER ANTI-MONEY LAUNDERING REGULATOR(S).
ARE LAWYERS COVERED BY ANTI-MONEY LAUNDERING LEGISLATION?
Yes, the law applies to designated non-financial business and professions (DNFBPs) and lawyers are classified as DNFBPs, according to Chapter I, Article 2, and Section ñ.
The abovementioned section establishes that legal professionals will be subject to the AML law when they take part in the design, implementation or advisory transactions for clients on the:
o purchase of a property or business entities
o managing money, securities or other assets
o opening or managing current accounts, savings accounts or securities accounts
o the organization of necessary contributions for the creation, operation or management of enterprises or of trusts (“Trusts”), companies or similar structures
o or acting on behalf of clients in any financial or real estate transaction
HAS THE THIRD EU MONEY LAUNDERING DIRECTIVE BEEN IMPLEMENTED? IF NOT, WHEN IS IT EXPECTED TO BE IMPLEMENTED?
The Third Directive was implemented by the enactment of the new Law
Act 10/2010 for Prevention of Money Laundering and Financing of Terrorism, which was passed unanimously by the Spanish Parliament on 28 April 2010.
The government has 1 year from the day the law goes into effect to enact the necessary regulations fro the Law’s development and execution. In spite of the time elapsed, almost three years, the regulations have not yet been enacted. They are expected to be approved in the month of April or May, 2014. We are looking forward for its approval as they will reduce a number of obligations that are currently imposed to all lawyers and small firms (which do not employ more than 10 people and do not invoice more than 2 millions euros) will be freed from that burden.
LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.
· Act 10/2010 Dated 28th April For Prevention of Money Laundering and Financing of Terrorism, which unifies the previous regulations and modifies the proposed regimen for anti-money laundering and terrorist financing previously set forth in the law 19/1993 of 28 December, the Royal Decree 925/1995 of 9 June and law 12/2003. The law has been modified by Act 19/2003 in respect of national Peps.
Royal Decree 925/1995 Of 9 June, which approves a regulation of law 19/1993 of 28 December (on specific measures to prevent money laundering) valid until the new regulation is approved
Royal Decree 54/2005 Of 21st January, which amends Regulation of Law 19/1993 of 28 December, on specific measures to prevent money laundering, as approved by RD 925/1995, of 9 June, and other rules for the regulation of the banking, financial and insurance systems. (In Spanish)
Law 12/2003 for the prevention of Money Laundering and Financing of Terrorism.
ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?
Visiting lawyers are subject to the same extent as local lawyers, namely when they intervene in any of the activities described in Chapter I, Article 2, and Section ñ of Act 10/2010.
LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.
· Guidelines approved by the Ilustre Colegio de Abogados de Malaga, and therefore applicable only to the members of this bar.
· The Guidance on the Risk-Based Approach to combating money laundering and terrorist financing recommended by FATF (Translated into Spanish by the Consejo General de la Abogacia Española)
Guidelines approved by the Consejo General de la Abogacía Española which can be found in their website here.
IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?
The Consejo General de la Abogacia Española has created a special Commission for the Prevention of Money Laundering which has the purpose of studying the legislation and suggesting the creation of a central organisation for the prevention of money laundering. At this moment, the project of regulation might reduce the possibilities of creating such organisation, an initiative which is rejected by the law profession.
DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS.
According to Articles 3-6 of Act 10/2010 covered subjects must fulfill the following requirements:
· Formal identification of the client
· Identification of the ultimate beneficiary
o The identification should be made before the establishment of the relationship or the operation
· Knowledge of the purpose and nature of the business relationship
o Take reasonable measures to verify the accuracy of the information
· Continuous monitoring of the business relationship
o Scrutinize the operations long term to guarantee that they match the information previously acquired by the covered subject about the client’s business profile and risk, as well the origin of funds and guarantee that the documents and information are up to date.
DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?
· Yes, according to Article 7 of Act 10/2010 covered subjects may determine the degree of implementation of the measures provided for in Articles 4,5,6 (see above) according to the risk and the type of customer relationship business, product or transaction, subject to the requirements for admitting clients under Article 26 of Act 10/2010.
o Must be able to demonstrate to the authorities that the measures taken are appropriate in light of the risk of money laundering or terrorist financing, due to a previously undertaken risk analysis study, which must be in writing.
o The risk-based approach does not only apply to new clients, but also to existing clients.
· According to Article 22 of Act 10/2010, Lawyers are exempt from the duty to abstain from business relationships or transactions in which due diligence measures cannot be applied.
· According to Articles 9 and 10 of Act 10/2010, Simplified due diligence measures (covered subjects are authorized not to apply due diligence measures provided for in Articles 3.2, 4, 5 and 6) apply only to:
o Public entities of the Member State of the European Union or third countries equivalent,
o Financial institutions domiciled in the EU or in third countries which are subject to supervision to ensure compliance with customer due diligence requirements.
o Listed companies whose securities are admitted to trading in the regulated market of the EU or third countries equivalent.
§ Exception: The Minister of Economy and Finance may exclude the application of simplified due diligence measures for certain clients.
o Simplified due diligence measures may be applied to clients involving a low risk or money laundering or terrorist financing.
o In any case, covered subjects must gather sufficient enough information to determine if a client falls under the exemptions in this article.
ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?
Yes, when the operation is not made in presence and the lawyer intervenes in any activity on behalf of the client in real estate, company formation or administration and financial transactions, including operations of bank accounts, a report should be filed when there is a suspicion or certitude of money laundering. Since 2013 the Spanish Peps should be subject to enhanced due diligence measures.
ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?
Same as above.
ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.
Yes, according to Article 8 of Act 10/2010, covered subjects may rely on third parties subject to this Act or subject to Legislation to prevent money laundering and terrorist financing from other Member States of EU/third party equivalents for the application of due diligence measures provided for in this section, except for continuous monitoring of the business relationship.
However, the covered subject will maintain full responsibility for the business relationship or transaction, and even if a breach is attributable to the third party.
WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?
Under Article 18 of Act 10/2010 covered subjects are under an obligation to report suspicious transactions to the Executive Service of the Commission for the Prevention of Money Laundering and Financial Crime.
Nonetheless, according to Article 22 of Act 10/2010, lawyers are not subject to the obligations under Articles 7.3, 18 and 21 with respect to information received from one of their clients or in the course of ascertaining the legal position of their client or performing their task of defending or representing their client in, or concerning judicial proceedings, including advice on instituting or avoiding proceedings, regardless of whether they have received or obtained such information before, during or after such proceedings.
Notwithstanding the provisions of Act 10/2010, the lawyers must keep the duty of professional secrecy in accordance with current legislation.
DOES ATTORNEY/ CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/ TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?
Under Article 22 of Act 10/2010, notwithstanding the provisions of that Act, the lawyers will still be subject to the attorney privilege provisions contained in the Spanish Law.
There is a grey area in respect of legal advice, which according to Spanish law, is subject to the duty of confidentiality, but according to the AML law, it seems that it should be reported.
DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?
ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?
No. According to article 19 of Act 10/2010, the lawyer should not carry on the transaction, but he/she should, if there is a risk that the operation could be spoiled.
IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.
Yes, according to Article 24 of Act 10/2010, the covered subjects shall not disclose to the client or any third party that he has given information to the Executive Service of the Commission or that the client is under scrutiny/could be under scrutiny for any operation that could be related to money laundering or terrorist financing.
Please note, it is not considered “tipping-off” if a lawyer tries to dissuade a client from engaging in an illegal activity.
DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT
Lawyers shall not engage in a business relationship with a new client if pursuant to customer due diligence they can not identify the customer or that the information obtained regarding the purpose of the business relationship is insufficient.
The lawyer should approve a policy of accepting new clients. According to article 26 of Act 10/2010, such policy shall include a description of the type of clients in which the risk of money laundering is higher according to the international standards. There should be extraordinary precautions in respect of those clients whose level of risk is higher that the average.
ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE.
Yes. The heightened due diligence requirements set forth in Act 10/2010 will need to be implemented to existing customers within 5 years (before May 2015) of the enactment of the law; or when commencing new business transactions with existing clients; or complex/high-volume transactions.
DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.
The description of anti-money laundering legislation is so ample that the lawyer can be affected also when collecting his/her legal fees. In fact, as money laundering includes the acquisition of funds of illegitimate origin, a lawyer who receives fees from a client whose activity is of criminal nature might be subject to prosecution.
HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?
Yes, lawyers have been implicated in money laundering and that they have been used as an example for the whole country and the whole of Europe.
In a recent case, "an investigating magistrate in Marbella fixed a bail figure of €100m for six lawyers who stand accused of laundering the proceeds of a large-scale corruption scandal involving local authorities in Andalucía."1
HAS THE FINANCIAL ACTION TASK FORCE (FATF) OR A FATF-STYLE REGIONAL BODY CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?
Yes, the Financial Action Task Force (FAFT) conducted a mutual evaluation report on Spain on 23 June 2006. The findings stated that the FATF evaluation team expressed some concerns about the relatively low numbers of STR’s, especially from outside the banking system. There was also concern that “there is no proper supervision or monitoring for AML/CFT requirements in place for DNFBPs”.
Overall, the compliance with lawyers if relatively low in this country.
1. On 5th December 2012, the Tribunal Supremo sentenced a lawyer for having created and provided his clients with structures that facilitate money laundering which some have profited to commit their crimes. Also, on 20th March 2007, another lawyer was sentenced for helping his clients on a ML crime.
Information provided by:
Nielson Sánchez Stewart
Nuestra Señora de Gracia, 1 – 29602 MARBELLA
Tel: 95 277 07 04
Fax: 95 277 87 46
49 Hallam Street – LONDON W1W 6JP
Tel: 020 –74 36 08 50
Go to the news section.
Back to Europe.