Trusts And Money Laundering In English Law. The Duties of Confidentiality and Disclosure of Trustees and the Obligations Arising out of Sections 93a, 93b and 93d of the Criminal Justice Act 1988

Abstract

With the rise of organised crime, money laundering has become a priority issue both at the national and international levels. In 2001, the OECD issued a report showing that trusts could be the instrument of money launderers. If trusts are usually used for perfectly legal operations, their advantages such as privacy may lead criminals to try and misuse them. But this area of the law has so far remained relatively unexplored and commentators have pointed out that a comprehensive examination of how trusts can be abused has never been carried out. The purpose of this research is admittedly narrower. It rather aims at identifying the possible conflicts between English anti-money laundering legislation and some of the traditional obligations of trustees, namely the duty of confidentiality and the duty to account. For the purpose of combating money laundering, ss. 93A and 93B of the Criminal Justice Act 1988 seem to have abrogated the duty of confidentiality owed by professionals to their clients/customers. These provisions even confer an immunity against actions for breach of confidence. Despite the fact that confidentiality is essential in a trust context, the scope of this immunity remains unclear. The trustees' position is all the more awkward since s. 93D will hold them liable if they disclose information which is likely to prejudice a police investigation in relation to money laundering. Beneficiaries, using their right to information, could possibly make trustees 'tip off'. At the end of the day, the sacrifices that trustees have to accept may not even be rewarded by the courts: the recent case of Bank of Scotland v. A Ltd demonstrates how trustees could be faced with the dilemma of violating either s. 93A or s. 93D. This decision illustrates one of several flaws in the UK anti-money laundering system.