Portugal

Portugal

  Back to search

Country contact

Alexandra Mota Gomes
PLMJ Advogados, SP, RL
Av. Fontes Pereira de Melo, 43
1050-119 Lisboa
alexandra.motagomes@plmj.pt
www.plmj.com/en/

The central authorities for reporting are the DCIAP (Central Department for Investigation and Criminal Action) and the UIF (Financial Information Unit).

However, the AML/CTF Law establishes a special framework for lawyers because their duty of professional secrecy makes this necessary.

First of all, lawyers are not bound to comply with the communication and collaboration duties when they obtain the information in the context of providing legal services to a client.

Additionally, the communication of any relevant information that is required will be done through the President of the Portuguese Bar Association, who is responsible for disclosing the data immediately and with no filters to the DCIAP and UIF.

In addition, information required by authorities following the communication of suspicious operations or the exercise of the abstention duty should be sent to the President of the Portuguese Bar Association.

Apart from those cases, when the information is required without prior exercise of the communication or abstention duties, in other words, when the lawyer is notified to disclose information about a specific operation or client, the law establishes that it must be disclosed directly to the requiring authority. This triggers many issues relating to the secrecy duty and lawyer-client relationship of trust.

In that regard, the understanding of some Lawyers, including the President of the Portuguese Bar Association, is that, even in those cases, any communication should be made through the President of the Portuguese Bar Association in order to protect the lawyer from any responsibility linked with the disclosure-secrecy paradox.

Money laundering is considered to be the process through which the person committing the crime, directly or indirectly and by any means, disguises or conceals the true source of benefits (property and revenue) obtained from criminal activity or from participation in such activity.

The criminal conduct captured by the money laundering offences is defined by the Portuguese Penal Code, as:

  • The conversion or transfer - or the assistance or facilitation of any transaction for the conversion or transfer - of benefits obtained by the perpetrator himself or by a third party, directly or indirectly, in order to disguise its illicit origin, or to avoid the criminal prosecution of the perpetrator or participant of such infringements;
  • The concealing or disguising of the true nature, source, location, disposition, movement or ownership of the benefits or related rights.

The entities tasked with supervising compliance with the AML rules and which also have the regulatory powers are defined by the AML/CTF Law, which separates them in two groups:

Financial entities’ supervisors and regulators:

  • The Insurance and Pension Funds Supervisory Authority
  • The Securities Market Commission – CMVM
  • The Bank of Portugal – BdP
  • The Inspectorate-General of Finance

Non-financial entities’ supervisors and regulators:

  • The Gambling Inspection and Regulation Service of Turismo de Portugal, I.P.
  • The Inspectorate-General of the Ministry of Labour, Solidarity and Social Security
  • The Institute of Public Markets, Real Estate and Construction – IMPIC
  • The Securities Market Commission – CMVM
  • The Order of Chartered Accountants
  • The Bar Association
  • The Chamber of Paralegals and Enforcement Agents
  • The Portuguese Institute of Statutory Auditors
  • The Institute of Registries and Notaries – IRN
  • The Authority for Food Safety and Economy – ASAE

All of the following pieces of legislation are applicable to lawyers and were designed to implement the anti-money laundering rules in Portugal:

  • Law no. 83/2017 of 18 August 2017, which establishes the measures to combat money laundering and terrorism financing, partially implementing the Directives 2015/849/EU of the European Parliament and of the Council of May 20, 2015, and 2016/2258/EU of the Council of 6 of December 2016. This law amends the Criminal Code and the Industrial Property Code and repeals Law no. 25/2008 of June 5;
  • Law no. 89/2017 of 21 August 2017, which approves the Legal Framework of the Central Register of Beneficial Ownership, provided for in article 34 of Law no. 83/2017 of August 18;
  • Law no. 92/2017 of 22 August 2017, which implements the use of specific means of payment in transactions involving amounts equal to or greater than EUR 3000;
  • Law no. 97/2017 of 23 August 2017, which regulates the implementation and enforcement of restrictive measures adopted by the United Nations or the European Union and establishes the penalties applicable to infringements of these measures;
  • Decree-Law no. 61/2007 of 14 March 2007, which approves the legal system governing the control of cash carried by individuals entering or leaving the EU through Portuguese territory, and the control of cash movements with other EU Member States;
  • Law no. 5/2002 of 11 January 2002, which lays down measures to combat organised crime and economic and financial crime and provides for a special system for the collection of evidence, the violation of professional secrecy and loss of assets to the State in relation to unlawful acts of a specified type, such as money laundering and terrorist financing (in Portuguese only);
  • Portuguese Criminal Code, whose article 368-A defines the crime of “laundering”.

Yes

If yes, to what extent?

Visiting lawyers are bound by the local law regarding anti-money laundering and terrorism financing to the same extent as Portuguese lawyers.

Lawyers, like any obliged entity that carries out its activities in Portugal, are bound by the duties established by the AML/CTF Law.

Reporting obligations apply to the financial and non-financial entities that are listed as obliged entities in the AML/CTF Law:

Financial:
  • Credit institutions;
  • Payment institutions;
  • Electronic money institutions;
  • Investment companies and other financial companies;
  • Securities investment companies and self-managed real estate investment companies;
  • Venture capital companies, investors and managers;
  • Credit securitisation companies;
  • Companies which sell contracts involving investment in tangible goods to the public;
  • Securities advisers;
  • Pension fund management companies;
  • Companies and life insurance intermediaries in the life insurance field.
Non-financial:
  • Casinos and other gambling service providers;
  • Auditors, external accountants, and tax advisors;
  • Lawyers, notaries and other independent legal professionals;
  • Company service providers;
  • Professionals who assist and represent in transactions concerning rights over a professional performing a sports activity;
  • Economic operators engaged in auction activity;
  • Dealers in precious stones;
  • Professionals who transport, store, process and distribute money or securities;
  • Professionals who provide goods or services paid for in cash.

The Portuguese Bar Association is the entity tasked with the supervision of lawyers’ compliance with the applicable AML/TF legal framework. It is also the lawyers’ regulator.

Regarding enforcement measures, as already stated by the AML/CTF Law, the Bar Association has the power to conduct administrative proceedings against lawyers who do not comply with the AML provisions.

Regarding the AML/CTF Law, obliged entities must appoint a compliance officer responsible for AML/CTF matters when their size or the complexity of their activity requires them to do so, or when this is required by legislation or by the AML supervisor.

Unlike law firms, sole practitioner lawyers are not required to appoint a compliance officer. Law firms must appoint a senior management to act as the interlocutor between the law firm and the authorities, regardless appointing a compliance officer if necessary.

The AML/CFT Law provides that the CDD must always take place prior to establishing the relationship with the client.

The CDD requirements change according to whether the client is a legal entity or a private individual.

If the client is an individual, he or she will be required to provide the following data: photograph, full name, signature, date of birth, nationality on the ID document, other nationalities, identification document (type, number, expiry date and issuer), tax ID number, profession, employer, permanent residence address, tax residence address (if different from permanent residence), country of birth.

Otherwise, if the client is a legal person, the data to collect is: name, corporate object, address of the registered office and, when applicable, the address of the parent company, legal entity ID number, identity of the holders of shares in the capital and in the voting rights with a value of 5% or more, identity of the members of the board of directors, management body, country of origin, CAE (classification of economic activities).

Besides that, when the client is a legal person, the obliged entities must obtain sufficient information on its beneficial owners, according to the specific risk of money laundering and terrorism financing.

In certain cases, more information will be required, if a higher risk situation is detected, as will be explained below.

Moreover, all the data must be verified by requiring documents able to confirm the accuracy of the information provided.

Yes

If yes is there a set framework in place or guidelines to assist with this?

The AML/CTF Law defines a set of guidelines to assist obliged entities with the subject.

As established, the extent of the CDD process must be determined using a risk-based approach, depending on factors such as: the nature, size and complexity of the activity carried on by the client, respective clients, business relationship, product or transaction, countries of activity and the origin and destination of the funds involved.

At least three issues must be considered to determine the level of risk: (i) the purpose of the business relationship, (ii) the quantity of assets deposited by client or volume of the operations executed, and (iii) the regularity or duration of the business relationship.

Yes

If yes, please supply further details

Under the AML/CTF Law, the nature and extent of the CDD process can be simplified based on the risks verified in each specific case.

To facilitate that judgement, there is a list of clients whose risk of money laundering and terrorism financing is recognized recognised as being potentially lower:

  • Companies whose securities are admitted to trading on a regulated market bound by information duties that ensure transparency in respect of their beneficial owners;
  • Public companies;
  • Clients with residence in countries considered by the AML/CTF Law as lower risk geographical areas.

Yes

If yes please provide details of these requirements and examples of the types of evidence required to demonstrate an enhanced level of CDD.

Lawyers/law firms will adopt enhanced CDD measures when there is a higher risk of money laundering or terrorism financing, which will always exist under the AML/CTF Law, when:

  • The client is established in a third country of high risk;
  • There is a long-distance business transaction/relationship;
  • There are politically exposed persons or other public and political officeholders involved.

Besides that, there is also a list of clients whose risk of money laundering and terrorism financing is considered as potentially higher. For instances:

  • Clients with whom a business relationship is established in abnormal circumstances;
  • Clients with residence in countries considered by the AML/CTF Law as higher risk geographical areas;
  • Clients whose activity involves operations intensively in cash.

Generally speaking, the AML/CTF Law establishes CDD measures that are common to all obliged entities. However, some specific and stricter CDD measures do apply to financial entities:

  • For life insurance contracts, a comprehensive set of information on the life insurance’s beneficiary will be required.
  • When acting as correspondents in the context of a cross-border correspondence relationship with respondents from third countries, a comprehensive set of information on the respondent will also be required.
  • Moreover, the regulators for each sector may define other CDD requirements appropriate to the activity carried on by the regulated entities.

Yes

Lawyers and all obliged entities are allowed to rely on a third part’s CDD. For that purpose, the third party must be an obliged entity (or with equivalent nature when its registered office is abroad) that applies CDD processes compatible with

those required by the AML/CTF Law and that is supervised in equivalent terms.

The law prohibits the use of CDDs from certain entities, especially when established in third countries of high risk. Supervisory bodies may also restrict the use of a third party’s CDD by regulation.

Entities that opt to rely on a third party’s CDD have to ensure that the third party is qualified to carry out the required CDD process and is an appropriate body. Regarding compliance with the AML/CFT requirements, the obliged entity is still under an obligation to ensure that information collected is complete as well as with conserving it.

The responsibility for compliance with AML/CTF legal framework is not excluded by relying on a third party’s CDD.

Yes

If yes, please provide further details

To begin with, the AML/CTF Law defines a wider and more exhaustive set of transactions in which lawyers and other legal professionals are subject to the duties imposed. As an example, it includes the operations of holding or purchasing rights over a professional performing a sports activity, which is not mentioned by the FATF recommendations.

In contrast, the Portuguese law determines more specifically the circumstances in which lawyers are not bound by the communication and collaboration duties. In that respect, the AML/CTF Law states that, when simply advising on how to take or avoid the action and regardless of the point at which the lawyer becomes aware of the information, the lawyer is not bound to those duties.

Obliged entities are under the obligation to report suspicious transactions whenever they face them. Therefore, lawyers must cooperate fully with the authorities in the combat against money laundering and financing of terrorism.

Nevertheless, an exception is granted, by virtue of professional secrecy. As already explained, when a suspicious transaction is detected in the context of providing legal services to a client – which involves evaluating a legal situation, legal counselling, defending or representing a client in legal proceedings or with regard to legal proceedings (including advice on how to take or avoid the action) – lawyers and other legal professionals are not obliged to report it or to collaborate with authorities by answering their requests to provide information.

Yes

If yes, please provide further details.

As set out above, when facing ML/TF suspicious in the context of the provision of legal services, the lawyer is not required to report. This is consistent with the attorney/client privilege and the duty of professional secrecy imposed on lawyers under the rules set out in the statutes of the Portuguese Bar Association.

The AML/CTF Law establishes an exception to the duty to keep professional secrecy with regard to compliance with the duties imposed in this area, especially the communication and cooperation duties. By doing that, the lawyer’s liability is excluded.

Therefore, the disclosure of confidential information in order to contribute to the fight against money laundering and the financing of terrorism does not constitute a violation of the secrecy obligations and any kind of liability is excluded.

Yes

If yes, must consent from authorities be obtained first?

Yes

If yes, please provide advice as to how to do this

Under the AML/CTF Law, if a lawyer discloses a suspicious transaction, it can still be executed or finalised once it is reported to DCIAP, which will decide whether or not to determine the temporary suspension of the operations in progress.

If the authority does not notify the lawyer to suspend the operations within 6 working days or expressively notifies him or her not to do so, then the lawyer should proceed with the legal advice/transaction.

In any case, lawyers must not give any indication to their client that they have made a disclosure.

Yes

If yes, please describe

The CDD procedures will not only apply to new clients but also to existing clients on a risk-sensitive basis. Regarding the AML/CTF Law, lawyers, as any obliged entity, will periodically take steps to ensure that the information they have collected is up-to-date, accurate and complete.

When evaluating a client’s risk level, lawyers should examine the origin and destination of the funds.

Once their origin is determined, lawyers should assess the findings and their consistency with the clients’ risk profile and the knowledge obtained regarding the nature, size and complexity of the activity carried on by the client.

The ID document is the main document to verify an individual’s identification.

The documents that can be used to verify a company client are the legal person/company ID document or a Commercial Registry certificate (or equivalent).

Generally speaking, all the ways they can be affected have been addressed.

The main issue affecting lawyers raised by the AML legislation relates to the confidentiality duty that binds lawyers under their professional ethics rules. As we have already said, professional secrecy is not fully compatible with the communication and cooperation duties imposed by the AML/CTF Law. This triggers many practical problems.

In the Portuguese jurisdiction, this matter is still under discussion and solutions are being prepared.

Yes

If yes, please provide details

There are not many lawyers who have been implicated in money laundering.

The appeal court proceedings’ database of the Portuguese Government can be accessed here. It is a public platform where cases of lawyers being implicated in the commission of money laundering can be found and consulted. The great majority of cases involving lawyers in this area are, in fact, related to professional secrecy and its lifting, in order for the lawyers to give evidences.

However, we can point to two cases in which lawyers were prosecuted:

  • In 18.07.2013, the Lisbon Court of Appeal acquitted a lawyer accused of the crime of money laundering (and tax fraud), because the subjective element of the crime was not confirmed (case no. 1/05.2JFLSB.L1-3).
  • In 15.04.2010, a lawyer was named an arguido (person of interest /defendant) concerning the commission of a crime of laundering. The lawyer appealed to the Lisbon Court of Appeal arguing that he had been named as arguido in breach if the applicable rules, and the court upheld his application (case no. 56/06.2TELSB-B.L1-9).

Yes

If yes, what were the findings concerning Lawyers' compliance with the FATF 40+9 recommendations?

Portugal has been a member of the Financial Action Task force (“FATF”) since 1991.

According to the 2017 Mutual Evaluation Report conducted by FATF, Portugal has a sound and effective framework for fighting money laundering and terrorist financing, but should improve the implementation of measures aimed at non-financial business and professions – such as lawyers.

As stated on the FAFT official website, “The FATF conducted an assessment of Portugal’s anti-money laundering and counter-terrorist financing (AML/CFT) system, based on the 2012 FATF Recommendations. This assessment reviews both the level of effectiveness of Portugal’s AML/CFT regime, as well as its level of technical compliance with the FATF Recommendations.

Portuguese authorities have a good level of understanding of the money laundering and terrorist financing risks they face as do financial sector entities. This is not always the case for non-financial businesses and professions and their supervisors. Portugal should also further explore risks associated with legal persons and arrangements and the non-profit sector, and take appropriate mitigation measures”.

However, there were some criticisms of the AML/CTF measures adopted by lawyers because, when it comes to preventive measures, lawyers “underestimate their overall exposure” and, regarding supervision, “the AML/CFT supervision is not exercised at all”.

Portugal is dedicated to working on those problems in order to solve them in the near future.

Yes

If yes, please provide a link to the published report

The published report can be accessed here (Portuguese version).