Attorney-client privilege in the light of the Anti-money laundering law of 18 September 2017
The law of 18 September 2017 on the prevention of money laundering and terrorist financing and the restriction on the use of cash (hereafter the “Law”) ensures the transposition into domestic law of the latest developments in the field of anti-money laundering and prevention of terrorist financing at European and international level.
The scope of the Law relates to a large number of obliged entities, namely notaries, insurances companies, the National Bank of Belgium, credit and settlement institutions and attorneys to name a few.
However, the Ordre des Barreaux Francophones et Germanophone (“OBFG”) and the Orde van Vlaamse Balies (“OBV”) have requested the annulment of several provisions recently incorporated in the Law on the grounds that they violate the obligation of professional secrecy incumbent upon attorneys.
The Constitutional Court has recently partially annulled the Law, in a two-fold manner, considering that several provisions do indeed contravene the obligation of attorney-client privilege.
- The first point of contention concerned the obligation provided by the Law to report suspicions to the Financial Intelligence Processing Unit (“CTIF”).
Indeed, the Law implements a risk-based approach which implies that the obliged entities are expected to carry out a preliminary analysis and assessment of the risk of money laundering.
It thus generalizes the due diligence obligation upon obliged entities and allows them to determine which measures are to be adopted depending on whether they face low or high-risk situations.
The Law also complements a repressive approach to money laundering and terrorist financing with preventive measures, subject to administrative and criminal sanctions, which apply to many entities, and in particular to attorneys when they assist their clients in the preparation or execution of certain transactions.
Among these "preventive measures" is namely the obligation for an attorney to report suspicions he/she may have to the CTIF when the client renounces a suspicious transaction on his/her advice.
According to the Law, all information that becomes known to an attorney within the framework of the essential activities of his profession, i.e. assisting and defending the client in court as well as providing legal advice, even outside any legal proceedings, remain covered by professional secrecy and cannot be brought to the attention of the CTIF.
There are however exceptions to this principle, namely when the attorney has been involved in money laundering or terrorist financing activities, has provided legal advice for money laundering or terrorist financing purposes or knows that the client has sought legal advice for such purposes.
The Court considered, regarding this point, that the information that an attorney knows about a suspicious transaction or attempted transaction that his client, on his/her advice, renounces to carry out is "known to the attorney" within the framework of his activity as legal advisor, and that, therefore, such information is covered by professional secrecy and should be exempt from the obligation to report suspicions.
Following, attorneys can no longer be obliged to transmit a suspicious transaction report to the CTIF when his client, on his/her advice, renounces such transaction.
- On the other hand, the second point of contention concerned the persons authorized to transmit information to CTIF.
Under the Law, each obliged entity must designate an "Anti-Money Laundering Compliance Officer" ("AMLCO"), i.e. one or more persons responsible for the practical implementation of internal control measures and responsible, among other things, for transmitting suspicious transaction reports to the CTIF.
As far as attorneys are concerned, the AMLCO is generally the attorney in charge of the case.
However, if this procedure cannot be followed, e.g. because the AMLCO cannot be reached in due time or other, the Law problematically provides that other persons, such as employees or representatives of the obliged entity, may personally proceed to the transmission of said information to the CTIF.
The justification regarding this provision and its application to attorneys, was that only a representative of the attorney, having himself the status of attorney and "necessarily belonging to the same law firm" could be allowed to transmit information to the CTIF in the event the AMLCO is not available.
Nevertheless, the Court considered in its ruling that there is no reasonable justification for a third party in the relationship between an attorney and his client, even if said third party is himself (or herself) an attorney, to be able to transmit information relating to that client to the authorities.
Therefore, the Court annulled, only with regard to attorneys, the possibility for persons other than the AMLCO to personally transmit information to CTIF.
For any further questions, please do not hesitate to contact KOAN’s Corporate Team.