How to protect attorney-client privilege during financial monitoring (AML Procedures) - the UNBA will define an algorithm
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As a subject of financial monitoring, an attorney must provide the Ministry of Justice with information related to combating money laundering. At the same time, they are also obliged to keep the attorney-client privilege. How to comply with both requirements of the Law?
This issue was discussed at a meeting of the Bar Council of Ukraine, which is taking place today in Uzhhorod.
Its relevance is because, on June 16, the Government approved the Procedure for Supervision in the Field of Prevention and Counteraction to Legalization (Laundering) of Proceeds of Crime, Terrorist Financing, and Financing of the Proliferation of Weapons of Mass Destruction over the Activities of Primary Financial Monitoring Entities, State Regulation and Supervision of which is carried out by the Ministry of Finance, the Ministry of Justice, and the Ministry of Digital Transformation (Cabinet of Ministers Resolution No. 662).
Valentyn Gvozdiy, UNBA Vice President, reminded that according to the Law "On Prevention and Counteraction to Legalization (Laundering) of Proceeds of Crime, Terrorist Financing and Financing of Proliferation of Weapons of Mass Destruction," an attorney is a specially designated subject of financial monitoring and, accordingly, must ensure the organization and conduct of primary financial monitoring. This makes it possible to detect suspicious financial transactions (activities) and report them to the State Financial Monitoring Service of Ukraine, as well as to prevent the use of attorneys' services for clients' financial transactions for illegal purposes.
State regulation in this area and supervision over the activities of law firms, law firms, and attorneys is carried out by the Ministry of Justice.
Therefore, all those who practice Law must submit to the Ministry of Justice information regarding their compliance with the requirements of the legislation on prevention and counteraction to money laundering.
However, Article 22 of the Law "On the Bar and Practice of Law" also enshrines the obligation to maintain the attorney-client privilege. It applies to the advocate and their assistant, trainee, and persons in an employment relationship with the advocate, law office, or law firm. Moreover, this obligation is imposed even on persons in respect of whom the right to practice Law has been terminated or suspended. Persons guilty of unauthorized access to or disclosure of the attorney-client privilege are liable. The Law also clearly defines cases when disclosing attorney-client privilege is not a violation. In particular, it is the submission of information by an attorney to the State Financial Monitoring Service.
The Procedure for Supervision (Resolution No. 662) defines the Procedure for conducting scheduled, unscheduled, on-site, and off-site inspections by the Ministry of Justice.
"However, the Ministry of Justice and its territorial bodies are not included in the list of bodies specified in Article 22 of the Law on the Bar, and practice of Law," noted Gvozdiy, "and disclosure of information containing attorney-client privilege to them will be considered a violation. After all, according to Article 10 of the Attorney's Code of Conduct, disclosure of information constituting attorney-client privilege is prohibited under any circumstances, even when it comes to attempts by the inquiry, investigation, and court authorities, which are, of course, illegal, to interrogate the attorney about the circumstances constituting the attorney-client privilege. In such circumstances, how to comply with the requirements of the legislation on the Bar and in the field of financial monitoring at the same time?"
On the one hand, clause 5 of the Supervision Procedure stipulates that the Ministry of Justice should cooperate with the self-government bodies of the primary financial monitoring entities by exchanging information, prioritizing risks, and conducting joint supervisory activities.
On the other hand, the protection of professional and other rights of advocates, the promotion of guarantees of the practice of Law, and the necessary conditions for the effective and efficient performance of professional duties by advocates is the primary goal of the UNBA Committee on Protection of Advocates' Rights and Guarantees of Practice of Law. The Procedure for ensuring guarantees of the practice of Law, and protection of professional and social rights of advocates was approved by the UNBA Decision No. 183 dated 27.07.2013.
Therefore, following the discussion of the problem, it was decided to supplement this Procedure with a new section that will define the actions of advocates (as subjects of monitoring) and bar self-government bodies during inspections on financial monitoring by the Ministry of Justice.
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