Reporting of suspicious transactions for lawyers

The Financial Action Task Force 40 Recommendations (Version adopted on February 2012 and updated on November 2017) set out preventive measures that address “reporting of suspicious transactions” requirement.

Lawyers are mainly concerned with Recommendation 23 which stipulates that the reporting of suspicious transactions requirement apply to lawyers (referred to as “designated non-financial businesses and professions”) who should be required to report suspicious transactions when, on behalf of or for a client, they engage in a financial transaction in relation to the following activities:

• buying and selling of real estate;

• managing of client money, securities or other assets;

• management of bank, savings or securities accounts;

• organisation of contributions for the creation, operation or management of
  companies;

• creation, operation or management of legal persons or arrangements, and
  buying and selling of business entities.

However, according to the interpretative note of Recommendation 23, lawyers are not required to report suspicious transactions if the relevant information was obtained in circumstances where they are subject to professional secrecy or legal professional privilege.

Each country determines the matters that would fall under legal professional privilege or professional secrecy. This would normally cover information lawyers receive from or obtain through one of their clients 1) in the course of ascertaining the legal position of their client, or 2) in performing their task of defending or representing that client in, or concerning judicial, administrative, arbitration or mediation proceedings.

According to FATF, countries may allow lawyers to send their Suspicious Transaction Report (STR) to their appropriate self-regulatory organisations, provided that there are appropriate forms of cooperation between these organisations and the Financial Intelligence Unit (FIU).

When having a suspicion, lawyers may try to dissuade their client from engaging in the suspicious activity but this may interfere with FATF’s Recommendation 21 (Tipping-off and Confidentiality) which prohibits from disclosing (“tipping-off”) the fact that an STR or related information is being filed with the FIU. However, it is generally accepted that when lawyers seek to dissuade a client from engaging in illegal activity, this does not amount to tipping-off.

In Lebanon, the last paragraph of article 5 of Law No. 44 dated 24/11/2015 related to Fighting Money Laundering and Terrorist Financing stipulates that the implementation rules of lawyers’ obligations under Law No. 44 – including rules related to the reporting of suspicious transactions – shall be “specified pursuant to a mechanism to be set by the Beirut Bar Association and the Tripoli Bar Association, taking into account the particularities and rules of the Legal Profession”.

In fact, the Beirut Bar Association and the Tripoli Bar Association established the aforementioned mechanism, by Council decision dated 20/4/2017 (دليل موجبات المحامين لمكافحة تبييض الاموال وتمويل الارهاب - نقابة المحامين - بيروت), which requires any lawyer engaging, on behalf of or for a client, in a financial transaction in relation to any of the activities mentioned above, to notify the President of the Bar, in writing and in person, of any suspicion in this regard, along with the necessary documents and information. Once received, the President of the Bar studies the transferred file and takes the appropriate decision, within two weeks, whether to notify the head of the FIU, or not.

Source: ACAMS; FATF; Lebanese laws and regulations.