Abstract
According to the South African Law Reform Commission, money laundering is the manipulation of illegally acquired wealth in order to obscure its true source or nature. This is achieved by performing a series of transactions with the proceeds of criminal activities that, if successful, will leave the illegally derived proceeds appearing as a product of legitimate transactions or investments. Professional money laundering assists and strengthens organised crime and may contribute to the undermining of the civil society and the financial system of a country. Attorneys as professionals are no doubt in a precarious position. On the one hand there is the duty to keep in confidence private information pertaining to clients’ affairs which is no doubt essential to the attorney-client relationship and on the other hand there is the duty to the community to uphold the ethics of the profession. Attorneys may find that they are caught between these seemingly conflicting duties and the question is which duty is more important. This article weighs the newly-imposed duties on the legal profession pertaining to money laundering against the equally important principle of attorney-client privilege and asks whether it is possible to reconcile anti-money laundering obligations with legal professional privilege. The article considers the latter duty in light of the ethics of the legal profession in South Africa and the foundation of legal professional conduct. In addition, the position in the United Kingdom and in Canada is also considered. Against this background it is argued that there is no need to regulate the South African professional legal industry any further. Until FICA’s reporting provisions are formally challenged in the Constitutional Court, attorneys will continue to remain uncertain as totheir position, notwithstanding the fact that guidance notes have been issued to aid attorneys in this regard. In order to comply with FICA and simultaneously preserve the attorney-client relationship, attorneys need to educate clients on the provisions of FICA. Furthermore, legal practitioners should have a sound legal knowledge of FICA in order help the State combat organised crime and laundering activities. Finally, it is advisable to keep up to date with the latest guidelines which regarding the independence of the profession; possible infringements of the fundamental right to privacy and potential threats to the confidential attorney-client relationship. It is the awareness of this precarious balance that will ensure compliance with the FICA without causing the attorneys’ profession to lose its credibility.
Highlights
The term “money laundering” has been coined first by US treasury agents trying to catch Al Capone in the 1930s,1 and is said to stem from Mafia ownership of laundromats in the United States of America during the Prohibition.[2]
The nature, structure and stages of money laundering are discussed together with a brief overview of the legislative framework of money laundering in South Africa, with the main focus on the Financial Intelligence Centre Act.[12]. Those provisions of FICA that regulate the legal profession are the main focus of the discussion and specific mention is made of the key concepts “accountable institution”, “reportable institution”, and “supervisory bodies” and the duties imposed on attorneys by FICA
The International Bar Association (“IBA”) published the International Bar Principles on Conduct for the Legal Profession,[195] which was developed for practising lawyers across the globe, and which provides lawyers with a framework to carry out their professional duties in a manner consistent with upholding the dignity and respect the profession in relation to their clients.[196]
Summary
According to the South African Law Reform Commission, money laundering is the manipulation of illegally acquired wealth in order to obscure its true source or nature. This article weighs the newly-imposed duties on the legal profession pertaining to money laundering against the important principle of attorney-client privilege and asks whether it is possible to reconcile anti-money laundering obligations with legal professional privilege. The article considers the latter duty in light of the ethics of the legal profession in South Africa and the foundation of legal professional conduct. OBITER 2013 precarious balance that will ensure compliance with the FICA without causing the attorneys’ profession to lose its credibility
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