Lawyers' Duties under the Draft EU Money Laundering Directive: Is Confidentiality a Thing of the Past?
| Pages | 103-114 |
| Published date | 01 April 2001 |
| DOI | https://doi.org/10.1108/eb027296 |
| Date | 01 April 2001 |
| Author | Helen Xanthaki |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 5 No. 2
Lawyers' Duties under the Draft EU Money
Laundering Directive: Is Confidentiality
a Thing of the Past?
Helen Xanthaki
THE DRAFT MONEY LAUNDERING
DIRECTIVE
Directive 91/308/EEC1 has been hailed by many
European Union commentators as an extraordinary
advance in the cause of EU integration, not least
because it is still one of the few Directives actually
in force in the field of EU criminal law. From the
point of view of money laundering control, the
Directive has been the EU's main weapon in its
endeavours to ensure that the liberalisation of the
financial markets and the consequent freedom of
capital movements 'is not used for undesirable pur-
poses,
such as money laundering'.2 Notwithstanding
the undoubtful success of the Directive to introduce a
minimum level of money laundering control mech-
anisms in all 15 EU member states (some of which
had not even criminalised money laundering before
transposing the Directive), however, Directive
91/308/EEC is no longer considered an adequately
progressive legislative text for the advancement of
further money laundering prevention to a pace
equal to the one currently in force both at the inter-
national level and within some of the EU member
states.
The legislative response of the EU to the
need for increasingly progressive legislation has
been the Draft Money Laundering Directive, which
having been passed by the Council and the Parlia-
ment is in the final stages of becoming part of EU
legislation.3
The main change in current EU legislation intro-
duced by the Draft Directive is the expansion of the
circle of persons covered by its provisions to credit
and financial institutions: accountants and auditors;
real estate agents; transporters of funds; operators,
owners and managers of casinos; dealers in high-
value goods, such as precious stones or metals; and
notaries and other independent legal professionals,
including lawyers. In national implementing legisla-
tive texts this circle of persons may be extended
further to include any other categories of professions
which are likely to be used for money laundering
purposes under the specific stipulations of their
national legal order.4 These professionals must now
require means of identification by their customers
whenever there is a suspicion of money laundering
activities,5 and especially when entering into business
transactions, when opening an account or savings
accounts, when offering safe custody facilities, or in
any case involving a sum amounting to a total of
€15,000 or more.6 In cases of insurance policies
these are covered when the premium exceeds
€1,000 in any given year or a one-off payment of
more than €2,500.7 Casinos have the obligation to
identify the true identity of their customers when
they purchase or exchange gambling chips of at
least €1,000.8 Articles 7 and 9 of the Money Launder-
ing Directive, as will be modified by the Draft Direc-
tive,
address the issue of tipping off. Article 7
provides that persons covered by the Directive
must refrain from participating in suspect transactions
until they have notified the competent authorities
determined in the Directive. If refusal to execute
may jeopardise the interception of those suspected
of money laundering offences, the operation must
take place as long as authorities are immediately
informed. In order to reassure prospective informers
that their reports will not involve them in prosecu-
tion for breach of national data protection legislation,
the proposed Art. 9 provides that such a breach
cannot be constituted even when legislative or
administrative national legal regulations so
provide.9
With specific reference to members of the legal
profession, the Directive specifies that they must
comply with the obligations imposed by the Direc-
tive when they assist or represent clients in the
buying or selling of real property or business entities,
handling of client money, securities or other assets,
creation, operation or management of companies,
trusts or similar structures, execution of any other
financial transactions. The inclusion of lawyers in
the new list of members of the 'vulnerable profes-
sions'
was not undertaken lightly by the Commis-
sion. In fact, in the Explanatory Memorandum of
the Draft Directive the Commission went to some
Journal of Money Laundering Control
Vol. 5, No. 2, 2001, pp. 103-114
© Henry Stewart Publications
ISSN 1368-5201
Page 103
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