In the aftermath of the Panama/Paradise Papers, the International Bar Association (IBA) and the Secretariat of the Organisation for Economic Co-operation and Development (OECD) have issued eight principles for the legal profession to follow.
Few people would disagree with Principle 1 that ‘you should not unwittingly help a client hide illegal conduct’, or Principle 3 that ‘you should know who your client is and how they obtained their money’. However, I am troubled by the need to remind international lawyers that they should not be helping criminals. The door is being shut after the horse has bolted.
We need a Who’s Who of Highly Compliant Lawyers
Thankfully, in the UK, we have had comprehensive anti-money laundering regulations for some time. The criminal offence for failing to prevent the facilitation of tax evasion is established in statute. Yet often, as a Tax Adviser, I am asked to give advice on structures where the instructing lawyer cannot adequately demonstrate, to my satisfaction, that they know the source of their client’s wealth. It is difficult to judge whether this means that my interpretation of the regulations is different to theirs, or whether the instructing lawyer is not following the regulations properly. There should be much more transparency to demonstrate that the UK’s Law Society is policing its members. I would welcome a public directory of those law firms which are rated as highly compliant in the anti-money laundering regulations.