How can lawyers ensure they aren’t facilitating criminal activity?

In late 2016, the International Bar Association (IBA) and the Organisation for Economic Co-operation & Development (OECD) formed a task force to review the role of lawyers in detecting, identifying and preventing illegal conduct in commercial transactions, particularly with regard to international transactions.

The IBA-OECD Task Force on The Role of Lawyers and International Commercial Structures has developed a Statement of Principles which it recommends to governments, bar associations and law societies around the world, to help ensure the proper administration of justice and uphold the rule of law.

 

Eight Key Principles

The Taskforce outlines eight key principles for lawyers to follow to ensure that they are not facilitating illegal activity by their clients:

 

Principle 1: Non-facilitation of illegal conduct

By the nature of a lawyer’s professional functions, such as the establishment of companies, trusts and partnerships, a lawyer may become unwittingly associated with illegal conduct. A lawyer should not facilitate illegal conduct and should undertake the necessary due diligence to avoid doing so inadvertently.

 

Principle 2: Misuse of the duty of confidence and privilege

A lawyer should not use the confidential nature of the lawyer–client relationship or the principles of legal professional privilege to shield wrongdoers. A lawyer should not act for a client if there is reason to believe that the lawyer’s services are being retained for the purpose of aiding the commission of a criminal offence.

 

Principle 3: Client due diligence

A lawyer should undertake sufficient due diligence to identify a client, beneficiaries and nature of the conduct/transaction, origin of the funds (consistent with applicable AML/CTF legislation) and be satisfied that the conduct is legal in the lawyer’s jurisdictions.

 

Principle 4: Action where client conduct is, may be or becomes illegal

Where the lawyer acts for a client whose original legal conduct has become illegal, or there is a reasonable suspicion of this, the lawyer should advise the client of the consequences and recommend that alternative solutions are pursued. If the client persists in the conduct, the lawyer should seriously consider ceasing to act for the client. Depending on the jurisdiction, a suspicious transaction report (STR) may also need to be filed or a similar reporting obligation triggered.

 

Principle 5: Multi-jurisdictional risk

Where a transaction involves conduct by a client, agents or representatives of a client in more than one jurisdiction and the lawyer has reasonable grounds to believe that the conduct may be or may become illegal in a jurisdiction(s), a lawyer should verify that expert advice has been obtained by the client from a lawyer with experience in that jurisdiction.

If the client refuses to obtain this advice, or refuses to follow the advice received, the lawyer should consider ceasing to act for the client and an STR may need to be filed.

 

Principle 6: Use of illegally obtained information

Lawyers should strongly discourage a client from paying private parties or public officials to illegally obtain information or evidence, which may constitute a criminal offence depending on the jurisdiction.

 

Principle 7: Disclosure of beneficial ownership

A lawyer should obtain and maintain up-to-date beneficial ownership information and take reasonable measures to verify its accuracy in relation to the lawyer’s client(s).

 

Principle 8: Advertising by lawyers on international commercial structures

Any advertising by lawyers should be transparent, accurate and truthful.

 

The role of domestic legislation

In many cases, lawyers will need to refer to domestic legislation to ensure compliance with the above principles.

For example, domestic legal frameworks should clearly define the professional duties and obligations of lawyers in relation to the use of illegally obtained information (Principle 6) and should provide for the disclosure of ultimate beneficial ownership (Principle 7) of any legal entity formed within that country’s jurisdiction.

Domestic regulation should also be referred to in determining how lawyers can legally advertise and the requirements that must be satisfied to ensure all advertising is accurate and truthful (Principle 8). Bar associations and law societies can provide further guidance relating to professional obligations and ethics.

Nyman Gibson Miralis provides expert defence in complex international criminal cases involving stakeholders across multiple jurisdictions.

Contact us if you require assistance.