Laundering and Lawyers — The Payment of Legal Fees and Money‐Laundering Offences in Germany and the UK
| Date | 01 March 2000 |
| Published date | 01 March 2000 |
| DOI | https://doi.org/10.1108/eb027266 |
| Pages | 78-88 |
| Author | Daniel Gentzik |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 4 No. 1
CASE STUDY
Laundering and Lawyers — The Payment of Legal
Fees and Money-Laundering Offences in Germany
and the UK
Daniel Gentzik
INTRODUCTION
Money laundering has become an issue of increasing
concern within the jurisdictions of Germany and the
UK. Following a range of international efforts1 to
combat money laundering, both countries have
implemented wide-ranging money-laundering pro-
visions.2 A closer look at these provisions reveals
that they are primarily designed to tackle organised
crime. And it can safely be claimed that talk of the
challenges faced by financial institutions, national
economies and society as a whole has become quite
fashionable nowadays in the light of professionally
expanding drug cartels, arms-dealing gangs and
other forms of organised groups carrying out serious
cross-border crime.3 Whenever 'organised crime'
appears to raise its ugly head, the introduction of
ever-widening and in many cases draconian measures
to counter money laundering as the Achilles
heel4
of
organised crime is widely held to be fully justified.
Recently, however, the ample implementation of
the EC Money Laundering Directive5 in both English
and German criminal law has gone far beyond the
original objective of mainly targeting organised
crime. Money-laundering legislation is no longer
restricted to financial institutions but extends to
all persons and professions that may be used for
money-laundering purposes.6 While this approach
may, arguably, prevent criminals from exploiting
businesses other than financial institutions, the wide
scope of this legislation may pose serious risks to pro-
fessionals who come into contact with 'dirty money'.
It is now widely recognised in Germany and the UK
that money-laundering provisions also apply, in prin-
ciple, to legal advisers.7 As an example taken from
British legislation, the disclosure provisions contain
certain defences for legal advisers if information has
been obtained in privileged circumstances. It thus
follows that lawyers are covered by the legislation
as well as any other professional. However, the full
potential impact of the provisions on legal advisers
goes beyond the mere requirement to disclose infor-
mation on certain criminals. It is conceivable that
lawyers themselves would commit an offence under
Article 93B(1) Criminal Justice Act (CJA) 1988
(or, in the case of proceeds from drug trafficking,
Article 51(1) Drug Trafficking Act (DTA) 1994)
when receiving payment for legal services if the
sum received represents the proceeds of crime.
§261(2) No. 1 German Criminal Code (StGB) poses
a similar danger to lawyers in Germany.
The extensive scope of this legislation may thus
seriously interfere with the defendant's right to
legal defence and, therefore, the right to due process,
as well as with a lawyer's right to act as a counsel for
the defence. This scenario is not of mere academic
interest. Particularly in the light of the proposed
extension of the EC Directive on Money Laundering,
which is likely to cover professions outside the finan-
cial sector, legal advisers may be required to take a
cautious approach when receiving payments for
their services.8 While the issue has not been of
major importance in the
UK,9
it has been recognised
among German scholars that defence lawyers may be
at risk when obtaining payment for their
services.10
But only recently the connection of defence lawyer
fees with money laundering has left the boundaries
of academic discourse and received widespread atten-
tion among legal practitioners and the wider
public11
when a lawyer was actually charged under §261(2)
No.
1 StGB for acquiring money derived from
criminal conduct according to §261(1)
StGB.12
It was held by the Higher Regional Court of
Hamburg13 on 6th January, 2000, that a lawyer
acting for a defendant will not be guilty of money
laundering under §261(2) No. 1 StGB as long as the
property received is intended to satisfy his contract
claim.14 The importance of the decision should not
be underestimated, since it sets a precedent for all
Journal of Money Laundering Control
Vol.
4,
No.
1,
2000.
pp 78-88
© Henry Stewart Publications
ISSN 1368-5201
Page 78
To continue reading
Request your trial