The Global South Dialogue on Economic Crime, an inter-disciplinary platform focused on advancing dialogue, held a webinar on Thursday, 28th October 2021. The webinar was themed “AML: Lawyers as Gatekeepers?” and explored lawyers’ roles in the fight against money laundering. The keynote speaker at the webinar was Dr Nathanael Tilahun, an Assistant Professor of Law at Coventry University’s Center for Financial and Corporate Integrity. Other speakers were Mr Emile Leiba, former President of the Jamaican Bar Association and partner at Duncox Jamaica; Dr Katie Benson, a lecturer in Criminology at Manchester University; Jamal Aziz, Executive Director, Research Society of International Law; and Benedict Daudu, Esq., Senior Associate at J.B. Daudu & Co., Nigeria. The jurisdictions under discussion at the webinar included Jamaica, Nigeria, the UK and Pakistan.
Dr Nathanael Tilahun, in his keynote speech entitled “Financial Action Task Force (FATF) Standards: Lawyers and the Duty to Report”, expounded on lawyers’ obligations as provided under the FATF standards. He explained that FATF standards do not apply in all circumstances and exclude lawyers’ activities that are undertaken to ascertain the legal position of clients and defend or represent clients in judicial, administrative, arbitration or mediation processes. Lawyers’ obligations, according to him, can be categorized as inward obligations (due diligence, verification, risk assessment, checking the nature and purpose of the business relationship between the clients) and outward-looking obligations (the duty to report to the state or the government). He then weighed in on the controversy generated by lawyers’ outward-looking obligations and the argument that the duty to notify is (in)compatible with the rule of law expectations within free and democratic societies. For lawyers to carry out their duties, to report, there must be significant amounts of pre-processes, thoughts and infrastructures put in place; risk assessment exercises and monitoring systems in place; a healthy practice of having customer due diligence; and most importantly, internal policy procedures and controls to detect, manage, filter out, further process, and escalate cases of suspicious transaction reports. He further talked about the effectiveness assessment, the standard FATF methodology, which considers risk materiality, structural elements, and contextual factors in determining the levels of compliance or non-compliance of any jurisdiction. He completed his presentation by highlighting some of the challenges faced by global south jurisdictions inadequately ensuring the compliance of FATF AML standards: poor awareness or understanding about FATF standards and what they entail; the difficulty of detection and subsequent prosecution of non-compliance; difficulty in building or maintaining experts and financial crime fighters; lack of designated clear and accessible procedures for reporting and the perception that AML and anti-terrorism laws are foreign laws not applicable to global south countries.
Emile Leiba
Emile Leiba shared the Jamaican experience in his topic “AML Regulations and Attorney-Client Privilege in Jamaica”. He noted that the AML structure was introduced in Jamaica in 2007 but was considered a breach of attorney-client privilege, legal professional privilege, and the principle of confidentiality between attorney and client. He described the AML structure as lacking sufficient safeguard and a check and balance system and that Jamaican lawyer engaged in tipping off could be in danger of reprisals or attacks. He discussed the work of the Jamaican Court of Appeal in assessing the AML legislation and concluded that there is currently no AML regime in Jamaica now. He argued that the AML regime is impractical and unworkable due to Jamaica’s already in place systems. He stated that Jamaica has been termed non-compliant and has been greylisted by FATF but maintained that Jamaica, like any other jurisdiction, has the right to challenge any laws and their constitutionality. He stressed that Jamaica is prepared to agree to a workable AML mechanism as long as it can function and operate for the benefit of everybody. He concluded his presentation by saying that every law in every jurisdiction must match the local realities of that jurisdiction and work in a way that makes it workable within that particular jurisdiction.
Dr Katie Benson
In her topic, “AML Gatekeeping in the United Kingdom (UK): The Role of Lawyers”, Dr Katie Benson discussed her research on criminal justice, regulatory frameworks and responses that have been put in place to prevent lawyers’ involvement in money laundering. She stated that these frameworks are shaped by FATF global standards and the EU money laundering derivatives in the UK. Lawyers can be prosecuted based on suspicions of money laundering or reasonable grounds for suspicion, and actual knowledge of money laundering is not required for prosecution. She mentioned the involvement of law firms in high-profile money laundering cases like those exposed in the Pandora Papers, Panama Papers and Paradise Papers. She considered the different ways that lawyers can become involved in facilitating money laundering: bribery, proceeds of overseas political corruption, conveyancing for properties purchased with funds suspected to be from drug trafficking, and failure to report outright cases of money laundering. She posited a need for homogenous combined approaches in the prevention and control of lawyers’ involvement in facilitating money laundering. She wrapped up her presentation with the assertion that the legal profession has various structures that make it susceptible to exploitation for money laundering and that those structures need to be identified and understood to develop strategies to stop money laundering.
Jamal Aziz
Speaking on “Anti-Money Laundering Regulation: The Pakistani Perspective”, Jamal Aziz discussed the overwhelming negative impact that terrorism financing has had in the past on the economy and quality of governance in Pakistan and the unprecedented success of the Pakistani government over the last five years in countering militancy and terrorism. He stated that the introduction of the AML/CFT regime in Pakistan caused a paradigm shift which resulted in Pakistan being greylisted by the FATF on three separate occasions. He attributed the most recent greylisting to structural deficiencies, lack of sufficient legal frameworks, and Pakistan had no laws for DNFBPs (Designated Non-Financial Business or Professions). He explored the challenges faced by Pakistan in ensuring an AML regime as conflict and duplication of roles between regulatory bodies, lack of coordination and understanding between lawyers and the Pakistani Bar Association, misinformation, and poor understanding of lawyers’ duties as they relate to the AML regime, and the mindset that the AML regime cannot be run efficiently in Pakistan. Giving suggestions on the way forward for Pakistan, he stated that the roles of supervisory or regulatory bodies need to be outlined clearly, guidance and clarity need to be sought from the Pakistani judiciary to act in an advisory capacity, and that awareness campaigns and proper sensitization need to be done in Pakistan.
Benedict Daudu
Benedict Daudu delivered his presentation on “Anti-Money Laundering Regulations and Lawyers: The Nigerian Perspective”. He discussed the compliance trajectory of Nigeria to FATF standards and the AML/CFT regime. He spoke about the rule of professional conduct guiding lawyers in Nigeria and the resultant conflict of interest caused by the AML regime in carrying out lawyers’ duties. He mentioned the various anti-money laundering legislation in Nigeria: The Money Laundering Prohibition Act of 2011 and its Amendment of 2012, as well as the Economic Financial Crime Commission’s Establishment Act of 2004; and the duty of financial institutions to report any cash transactions higher than $2500 for individuals and $5000 for corporations. According to him, Nigerian courts ruled that lawyers are excluded from the definition of DNFBP’s and excluded from the list of individuals obligated to report. He stated the challenge faced by Nigeria in enforcing an AML regime: the absence of searchable, categorized records for lawyers and members of the public that have committed money laundering offences. It is not enough that facilitators of money laundering be punished. The reasons for their punishment must be searchable and must be found in an index. He stated that despite the giant strides made by Nigeria in curbing money laundering, there is still a large window of growth, especially as regards lawyers and the role they play in money laundering.
Conclusion and Way Forward
Dr Lovina Otudor of the Global South Dialogue on Economic Crime concluded from the webinar that there is a divide in countries’ opinions as to what roles lawyers play or need to play in the fight against money laundering. She mentioned that there is a disparity in jurisdictions and that transplantation of AML regimes on global south countries leaves a lot to be desired as what works in developed economies might not work in less developed ones. She recommended enhancing preventive measures, supervision, and compliance practices within Nigeria’s legal profession to combat money laundering, terrorist financing, and proliferation financing effectively, and highlighted the need to bridge the knowledge gap among legal practitioners by mandating AML/CFT/PF training and integrating these topics into the Nigerian Law School curriculum. These steps, she argued, would provide lawyers with the necessary skills to fulfill their obligations.
Dr Lovina also emphasized the importance of risk-based supervision, calling for regular assessments to identify specific risks and the use of emerging technologies for improved off-site and onsite monitoring. She said that supervisors should impose proportionate sanctions for non-compliance and proposed comprehensive guidance for law firms, outlining obligations such as staff training, transaction controls, fund segregation, and audits. She noted that this guidance should also address vulnerabilities in cross-border legal services, particularly with clients from high-risk jurisdictions.
In her concluding statements, she recommended that trusts be mandated to disclose beneficial ownership information to aid law firms in conducting due diligence, and advocated for regular evaluations of AML/CFT compliance policies and practices to address emerging risks. She stressed the need for enhanced due diligence in high-value and politically exposed person (PEP) transactions, alongside vigilant monitoring of property transactions, to improve the legal profession’s capacity to fight money laundering and financial crime.