Skip to main content
SpringerLink
Log in

Money Laundering, Anti-Money Laundering and the Legal Profession

  • Chapter
  • First Online:
Book cover The Palgrave Handbook of Criminal and Terrorism Financing Law

Abstract

This chapter considers the complex and contentious relationship between the legal profession and the fight against criminal finance. First, it examines the growing concern about the role that legal and financial professionals play in the facilitation of money laundering. It then discusses the designation of such professionals as ‘gatekeepers’, and their subsequent inclusion in the preventative obligations of the anti-money laundering regime. Finally, the chapter considers the implications of these obligations for legal professionals, drawing on recent empirical research to highlight the far-reaching nature of anti-money laundering legislation in the UK, which allows for legal professionals to be convicted for money laundering offences without having actual knowledge or criminal intent, or being actively engaged in the laundering.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 299.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 379.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 379.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    David Garland, ‘The Limits of the Sovereign State: Strategies of Crime Control in Contemporary Society’ (1996) 36(4) British Journal of Criminology 445, 452.

  2. 2.

    Valsamis Mitsilegas, ‘Countering the Chameleon Threat of Dirty Money: ‘Hard’ and ‘Soft’ Law in the Emergence of a Global Regime Against Money Laundering and Terrorist Financing’ in Adam Edwards and Peter Gill (eds), Transnational Organised Crime: Perspectives on Global Security (Routledge 2006).

  3. 3.

    Council Directive 91/308/EEC of 10 June 1991 on prevention of the use of the financial system for the purpose of money laundering (First Money Laundering Directive) [1991] OJ L166/77.

  4. 4.

    Mitsilegas (n 2) 199.

  5. 5.

    European Parliament and Council Directive 2001/97/EC of 4 December 2001 amending Council Directive 91/308/EEC on prevention of the use of the financial system for the purpose of money laundering (Second Money Laundering Directive) [2001] OJ L344/76; European Parliament and Council Directive 2005/60/EC of 26 October 2005 on the prevention and use of the financial system for the purpose of money laundering and terrorist financing (Third Money Laundering Directive) [2005] OJ L309/15.

  6. 6.

    Katie Benson, ‘The Facilitation of Money Laundering by Legal and Financial Professionals: Roles, Relationships and Response’ (PhD thesis, University of Manchester 2016).

  7. 7.

    Financial Action Task Force, Report on Money Laundering Typologies 1996–1997 (FATF 1997) para 30.

  8. 8.

    Ibid. para 16.

  9. 9.

    Financial Action Task Force, Report on Money Laundering Typologies 2003–2004 (FATF 2004) para 86.

  10. 10.

    Financial Action Task Force, Global Money Laundering and Terrorist Financing Threat Assessment (FATF 2010) para 44.

  11. 11.

    Ibid.

  12. 12.

    FATF 1997 (n 7); Financial Action Task Force, Risk-Based Approach: Guidance for Legal Professionals (FATF 2008); FATF 2010 (n 10); Financial Action Task Force, Money Laundering and Terrorist Financing Vulnerabilities of Legal Professionals (FATF 2013).

  13. 13.

    World Economic Forum, Organized Crime Enablers: A Report for the Global Agenda on Organized Crime (World Economic Forum 2012) 4.

  14. 14.

    Ibid. 5.

  15. 15.

    Australian Crime Commission, Key Crime Enablers (Australian Crime Commission 2013) 2.

  16. 16.

    Europol, EU Organised Crime Threat Assessment: OCTA 2013 (Europol 2013) 14.

  17. 17.

    Home Office, Serious and Organised Crime Strategy: October 2013 (Home Office 2013) 48.

  18. 18.

    National Crime Agency (NCA), National Strategic Assessment (NCA ) of Serious and Organised Crime 2016 (National Crime Agency 2016) 29.

  19. 19.

    NCA, National Strategic Assessment of Serious and Organised Crime 2014 (National Crime Agency 2014) 12.

  20. 20.

    NCA (n 18) 29.

  21. 21.

    Home Office (n 17) 19.

  22. 22.

    HM Treasury, UK National Risk Assessment of Money Laundering and Terrorist Financing (HM Treasury/Home Office 2015) 41–46.

  23. 23.

    Ibid. 42.

  24. 24.

    For example, Ping He, ‘Lawyers, Notaries, Accountants and Money Laundering’ (2005) 9(1) Journal of Money Laundering Control 62; Olatunde Julius Otusanya, Solabomi Omobola Ajiboldae and Eddy Olajide Omolehinwa, ‘The Role of Financial Intermediaries in Elite Money Laundering Practices: Evidence from Nigeria’ (2012) 15(1) Journal of Money Laundering Control 58.

  25. 25.

    Including, Andrea Di Nicola and Paola Zoffi, ‘Italian Lawyers and Criminal Clients. Risks and Countermeasures’ (2005) 42(2) Crime, Law and Social Change 201; Michael Levi, Hans Nelen and Francien Lankhorst, ‘Lawyers as Crime Facilitators in Europe: An Introduction and Overview’ (2005) 42(2) Crime, Law and Social Change 117; David Middleton and Michael Levi, ‘The Role of Solicitors in Facilitating ‘Organized Crime’: Situational Crime Opportunities and their Regulation’ (2005) 42(2) Crime, Law and Social Change 123.

  26. 26.

    Melvin Soudijn, ‘Removing Excuses in Money Laundering’ (2012) 15(2) Trends in Organized Crime 146, 147.

  27. 27.

    David Middleton, ‘The Legal and Regulatory Response to Solicitors Involved in Serious Fraud: Is Regulatory Action More Effective than Criminal Prosecution?’ (2005) 45(6) British Journal of Criminology 810; David Middleton, ‘Lawyers and Client Accounts: Sand Through a Colander’ (2008) 11(1) Journal of Money Laundering Control 34.

  28. 28.

    Middleton and Levi (n 25); David Middleton and Michael Levi, ‘Let Sleeping Lawyers Lie: Organized Crime, Lawyers and the Regulation of Legal Services’ (2015) 55(4) British Journal of Criminology 647.

  29. 29.

    Middleton and Levi (n 28).

  30. 30.

    Stephen Schneider, ‘Testing the Limits of Solicitor-Client Privilege: Lawyers, Money Laundering and Suspicious Transaction Reporting’ (2005) 9(1) Journal of Money Laundering Control 27, 27.

  31. 31.

    Ibid.

  32. 32.

    Lawton Cummings and Paul Stepnowsky, ‘My Brother’s Keeper: An Empirical Study of Attorney Facilitation of Money Laundering through Commercial Transactions’ [2011](1) Journal of the Professional Lawyer 1, 1.

  33. 33.

    Benson (n 6).

  34. 34.

    Ministerial Conference of the G-8 Countries on Combating Transnational Organized Crime (Moscow, 19–20 October 1999), Communiqué (Moscow Communiqué) <www.g8.utoronto.ca/adhoc/crime99.htm> accessed 24 July 2017.

  35. 35.

    Ibid. para 32.

  36. 36.

    Kevin Shepherd, ‘Guardians at the Gate: The Gatekeeper Initiative and the Risk-Based Approach for Transactional Lawyers’ (2009) 43(4) Real Property, Trust and Estate Law Journal 607; Kevin Shepherd, ‘The Gatekeeper Initiative and the Risk-Based Approach to Client Due Diligence: The Imperative for Voluntary Good Practices Guidance for U.S. Lawyers’ [2010] Journal of The Professional Lawyer 83.

  37. 37.

    Financial Action Task Force, Review of the FATF Forty Recommendations: Consultation Paper (FATF 2002).

  38. 38.

    Shepherd (n 36).

  39. 39.

    Financial Action Task Force, FATF 40 Recommendations October 2003 (FATF 2003).

  40. 40.

    Ibid. Recommendation 12.

  41. 41.

    For example, Helen Xanthaki, ‘Lawyers’ Duties under the Draft EU Money Laundering Directive: Is Confidentiality a Thing of the Past?’ (2001) 5(2) Journal of Money Laundering Control 103; Mitsilegas (n 2); Michelle Gallant, ‘Lawyers and Money Laundering Regulation: Testing the Limits of Secrecy in Canada’ (3rd Global Conference on Transparency Research, Paris, October 2013).

  42. 42.

    Gallant (n 41) 1.

  43. 43.

    Zaiton Hamin and others, ‘Reporting Obligations of Lawyers under the AML/ATF Law in Malaysia’ (2015) 170 Social and Behavioral Sciences 409.

  44. 44.

    Ibid. 413.

  45. 45.

    Laurel Terry, ‘An Introduction to the Financial Action Task Force and its 2008 Lawyer Guidance’ [2010] Journal of the Professional Lawyer 3, 68.

  46. 46.

    Hamin and others (n 43).

  47. 47.

    Gallant (n 41) 9.

  48. 48.

    Danielle Kirby, ‘The European Union’s Gatekeeper Initiative: The European Union Enlists Lawyers in the Fight Against Money Laundering and Terrorist Financing’ (2008) 37(1) Hofstra Law Review 261, 265.

  49. 49.

    Colin Tyre, ‘Anti-Money Laundering Legislation: Implementation of the FATF Forty Recommendations in the European Union’ [2010] Journal of the Professional Lawyer 69.

  50. 50.

    Second Money Laundering Directive (n 5).

  51. 51.

    The Money Laundering Regulations 2007 (MLR 2007), SI 2007/2157, reg 3(1).

  52. 52.

    Ibid. reg 5.

  53. 53.

    Ibid. reg 8.

  54. 54.

    Ibid. reg 19.

  55. 55.

    Ibid. reg 20.

  56. 56.

    Ibid. reg 21.

  57. 57.

    Ibid. reg 20.

  58. 58.

    See, for example, Peter Alldridge, Money Laundering Law: Forfeiture, Confiscation, Civil Recovery, Criminal Laundering and Taxation of the Proceeds of Crime (Hart Publishing 2003); Robin Booth and others, Money Laundering Law and Regulation: A Practical Guide (Oxford University Press 2011); Karen Harrison and Nicholas Ryder, The Law Relating to Financial Crime in the United Kingdom (Ashgate Publishing 2013).

  59. 59.

    Proceeds of Crime Act 2002 (POCA 2002), s 327(1).

  60. 60.

    Ibid. s 327(3).

  61. 61.

    Ibid. s 328(1).

  62. 62.

    Ibid. s 329(1).

  63. 63.

    Ibid. s 327(2)(a); s 328(2)(a); s 329(2)(a). For details on making an authorised disclosure, see s 338.

  64. 64.

    Ibid. s 327(2)(b); s 328(2)(b); s 329(2)(b).

  65. 65.

    Ibid. s 327(2)(c); s 328(2)(c); s 329(2)(c).

  66. 66.

    CPS, Proceeds of Crime Act 2002 Part 7—Money Laundering Offences: Legal Guidance (CPS 2010) <www.cps.gov.uk/legal/p_to_r/proceeds_of_crime_money_laundering/> accessed 24 July 2017.

  67. 67.

    For further discussion, see Harrison and Ryder (n 58) 13–15.

  68. 68.

    CPS (n 66).

  69. 69.

    Rudi Fortson, ‘Money Laundering Offences under POCA 2002’ in William Blair and Richard Brent (eds), Banks and Financial Crime—The International Law of Tainted Money (Oxford University Press 2010) 181.

  70. 70.

    POCA 2002 (n 59) s 340(3) (emphasis added).

  71. 71.

    Ibid. s 328(1).

  72. 72.

    Alldridge (n 58) 182. See also Stephen Shute, ‘Knowledge and Belief in the Criminal Law’ in Stephen Shute and Andrew Simester (eds), Criminal Law Theory: Doctrines of the General Part (Oxford University Press 2002); and G.R. Sullivan, ‘Knowledge, Belief and Culpability’ in Stephen Shute and Andrew Simester (eds), Criminal Law Theory: Doctrines of the General Part (Oxford University Press 2002).

  73. 73.

    Alldridge (n 58) 182; Harrison and Ryder (n 58) 13–14.

  74. 74.

    Law Society, Anti-Money Laundering Practice Note (Law Society 2013) 72 <www.lawsociety.org.uk/sup port-services/advice/practice-notes/aml/> accessed 24 July 2017.

  75. 75.

    Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (8 November 1990) ETS 141/1990, art 6(1); UN Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (adopted 20 December 1988, opened for signature 20 December 1988) (1988) 28 ILM 497, art 3(1).

  76. 76.

    European Parliament and Council Directive (EU) 2015/849 of 20 May 2015 of the on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (Fourth Money Laundering Directive) [2015] OJ L141/73 (emphasis added).

  77. 77.

    POCA 2002 (n 59) s 330(5).

  78. 78.

    Ibid. s 330(3).

  79. 79.

    Ibid. Schedule 9, Part 1.

  80. 80.

    The Money Laundering Regulations 2003 SI 2003/3075; Proceeds of Crime Act 2002 (Business in the Regulated Sector and Supervisory Authorities) Order 2003, SI 2003/3074.

  81. 81.

    Doug Hopton, Money Laundering: A Concise Guide for All Businesses (Gower Publishing 2009) 57.

  82. 82.

    Financial and credit institutions, including bureaux de change and money transfer services; providers of services in relation to the formation, management or operation of a company or trust; auditors, insolvency practitioners, accountants and tax advisers; independent legal professionals (in connection with financial or property transactions); estate agents; casinos; and dealers in goods to a value of €15,000 or more.

  83. 83.

    POCA 2002 (n 59) s 330(1–4).

  84. 84.

    Ibid. s 330(6–7).

  85. 85.

    Law Society (n 74) 72.

  86. 86.

    POCA 2002 (n 59) s 332. See CPS (n 66).

  87. 87.

    Alldridge (n 58) 183; Hopton (n 81).

  88. 88.

    POCA 2002 (n 59) Explanatory Notes para 479.

  89. 89.

    Moscow Communiqué (n 34) para 32 (emphasis added).

  90. 90.

    Research conducted as part of an ESRC-funded PhD carried out at the University of Manchester between 2012 and 2016. See Benson (n 6).

  91. 91.

    FATF 2013 (n 12).

  92. 92.

    Full details of the research methodology can be found in Benson (n 6).

  93. 93.

    Including Solicitors Disciplinary Tribunal (SDT) hearing transcripts; Court of Appeal hearing transcripts; media reports; fieldwork notes and observations from attendance at SDT hearing.

  94. 94.

    Benson (n 6).

  95. 95.

    Prior to the enactment of the Proceeds of Crime Act, laundering offences were covered by two different Acts: laundering the proceeds of drug trafficking was an offence under the Drug Trafficking Act 1994, and laundering the proceeds of other crimes was covered by the Criminal Justice Act 1998. The previous Acts were used to prosecute solicitors in this sample, where the offence had occurred prior to the enactment of the Proceeds of Crime Act.

Author information

Authors and Affiliations

  1. School of Law, University of Manchester, Manchester, UK

    Katie Benson

Authors
  1. Katie Benson
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

  1. University of Sussex, Falmer, United Kingdom

    Colin King

  2. University of Leeds, Leeds, United Kingdom

    Clive Walker

  3. Notre Dame Law School, Notre Dame, IN, USA

    Jimmy Gurulé

Rights and permissions

Reprints and permissions

Copyright information

© 2018 The Author(s)

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Benson, K. (2018). Money Laundering, Anti-Money Laundering and the Legal Profession. In: King, C., Walker, C., Gurulé, J. (eds) The Palgrave Handbook of Criminal and Terrorism Financing Law. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-64498-1_6

Download citation

  • DOI: https://doi.org/10.1007/978-3-319-64498-1_6

  • Published:

  • Publisher Name: Palgrave Macmillan, Cham

  • Print ISBN: 978-3-319-64497-4

  • Online ISBN: 978-3-319-64498-1

  • eBook Packages: Law and CriminologyLaw and Criminology (R0)

Publish with us

Policies and ethics

Search

Navigation